SIP vs PPF: Planning for retirement can be confusing, but it’s essential to start early. Two popular investment options, SIP (Systematic Investment Plan) and PPF (Public Provident Fund) can help you build a sizeable retirement corpus. But which one is more beneficial? To find out, let’s consider a scenario: investing Rs 90,000 annually for 30 years. We will find out through calculations which option can generate a bigger retirement fund. 

What is a Systematic Investment Plan (SIP)?

SIP is a simple way to invest a fixed amount regularly in mutual funds. With a minimum investment of just Rs 100, you can start growing your money easily.

What is Public Provident Fund (PPF)?

PPF is a government savings plan that helps you save money for the future. It’s a safe, low-risk investment with guaranteed returns and tax benefits.

PPF interest rate

As of February 2025, the PPF interest rate in India is 7.1 per cent per year.

Tax benefits of PPF

Your PPF investments, interest, and withdrawals are completely tax-free. You don’t have to pay any taxes on your earnings.

Minimum PPF investment

You can start a PPF account with a minimum investment of Rs 500 per year. The maximum limit is Rs 1.5 lakh per year.

SIP minimum investment

You can start a systematic investment plan with as little as Rs 100. You also have the flexibility to change your investment amount anytime.

How PPF works

PPF is a savings scheme offered by post offices and banks. You can put money into your PPF account and earn 7.1 per cent interest every year.

How SIP works?

1. Set up automatic transfers from your bank account.
2. A fixed amount is deducted regularly (every month).
3. The money is invested in a mutual fund.
4. You get units of the fund based on its current value.

PPF calculation conditions

Yearly investment: Rs 90,000 (monthly investment Rs 7500 x 12 months)
Time period: 30 years
Rate of interest: 7.1 per cent 

PPF: What will be your retirement corpus in 30 years with Rs 90,000/year investment?

On Rs 90,000/year contribution, the estimated retirement corpus in 30 years will be Rs 92,70,546. 

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 7,500 (90,000/12)

SIP: Retirement corpus on Rs 7,500 monthly investment for 30 years (hybrid fund)

At 12 per cent annualised return, the estimated corpus in 30 years will be Rs 2,31,07,299. During that time, the invested amount will be Rs 27,00,000, and capital gains will be Rs 2,04,07,299.

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