SIP vs PPF: Planning for retirement? Two popular options to consider are SIP and PPF. But which one will help you save more? Let’s do a simple comparison. Imagine investing Rs 1,00,000 every year for 35 years. We will do the calculations to see which option gives you a bigger retirement fund.

Systematic Investment Plan (SIP)

A Systematic Investment Plan (SIP) is a simple way to invest money regularly in SIP mutual fund (s). You can start with as little as Rs 100 and invest a fixed amount at regular intervals.

Public Provident Fund?

The Public Provident Fund (PPF) is a government-backed savings plan that helps you save money for the long term. It’s a low-risk investment option that provides fixed returns and tax benefits, making it a safe and attractive choice.

Tax benefits

PPF investments, interest, and withdrawals are completely tax-free, thanks to Section 80C. This means you get to keep all your earnings without paying any taxes.

Current interest rate in PPF?

As of February 2025, the interest rate for Public Provident Fund (PPF) in India is 7.1% per year. This rate has stayed the same since April 2020.

Minimum investment amount to start SIP?

You can start an SIP with just Rs 100. Plus, you have the flexibility to increase, decrease, or even stop your SIP investments as needed.

Minimum investment in PPF?

To invest in a PPF, you need to deposit at least Rs 500 in a year. The maximum amount you can deposit in a year is Rs 1.5 lakh.

How SIP Works?

Here’s how SIP works:
1. You set up an automatic transfer from your bank account.
2. A fixed amount is deducted at regular intervals (e.g., monthly).
3. The money is invested in a mutual fund.
4. You receive units of the fund based on its current value (NAV).

How does PPF work?

This scheme, run by post offices and banks, offers voluntary contributions to its account holders. Post Office offers a 7.1 per cent interest rate compounded yearly.

PPF calculation conditions

Yearly investment: Rs 1,00,000 (monthly investment Rs 8333 x 12 months)
Time period: 35 years
Rate of interest: 7.1 per cent 

PPF: What will be your retirement corpus in 35 years with Rs 1,00,000/year investment?

On Rs 1,00,000/year contribution, the estimated retirement corpus in 35 years will be Rs 1,51,31,905. 

SIP calculation conditions

Since SIP investments don’t have fixed returns, we’re using estimated annual returns of 8 per cent for debt funds, 10 per cent for equity funds, and 12 per cent for hybrid funds. We’re also assuming a monthly investment of Rs 8,333 (1,00,000/12)

SIP: Retirement corpus on Rs 8,333 monthly investment for 35 years (hybrid fund)

At 12 per cent annualised return, the estimated corpus in 35 years will be Rs 4,59,21,756. During that time, the invested amount will be Rs 34,99,860, and capital gains will be Rs 4,24,21,896.

SIP: Retirement corpus on Rs 8,333 investment for 35 years (equity fund)

At 10 per cent annualised return, the estimated corpus in 35 years will be Rs 2,85,47,970. The estimated capital gains will be Rs 2,50,48,110.

SIP: Retirement corpus on Rs 8,333 investment for 35 years (debt fund)

At 8 per cent annualised return, the estimated corpus in 35 years will be Rs 1,79,68,889. The estimated capital gains will be Rs 1,44,69,029.

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)