PPF v/s SIP: Investing today is no longer limited to saving money; it’s also essential to create future financial security by investing in the right place. Many investors are confused between the Public Provident Fund (PPF) and the Systematic Investment Plan (SIP) when investing for the long term. Both options offer benefits in their own way, but their nature, risk level, and return potential differ. If an investor invests ₹1,11,111 every year, there could be a significant difference in the corpus after 15 years.
How does an investment in PPF grow?
The Public Provident Fund is a government-backed savings scheme, considered a safe investment option. The interest rate on it is determined by the government from time to time. The biggest advantage of this scheme is its security and tax benefits. The investment amount, the interest earned on it, and the maturity amount are all tax-free.
If an investor deposits ₹1,11,111 every year and assumes an average annual interest rate of 7%, the total investment value after 15 years could reach approximately ₹30 to ₹32 lakh. This is considered a good option for those seeking stable returns without risk.
How much can a SIP investment create?
SIP is a mutual fund investment method in which investors invest a fixed amount at regular intervals. Because it is linked to the stock market, it is subject to fluctuations, but it has a higher potential for better returns over the long term.
If ₹1,11,111 is invested in a SIP every year and an average annual return of 12% is assumed, the total investment value could reach approximately ₹45 to ₹50 lakh in 15 years. This is why SIP is considered a strong option for long-term wealth creation.
Which to Choose Between PPF and SIP
PPF is considered a completely safe investment because it is backed by the government. It is free from market risk. SIP, on the other hand, is affected by market fluctuations. However, over the long term, the impact of market volatility is mitigated and can yield better returns.
PPF may be suitable for investors seeking stability. For investors seeking higher returns over the long term and having the ability to take risks, SIP may be a better option.
Is investing in both simultaneously a good strategy?
Financial planning experts often recommend balanced investing. This means that investments should be spread across different options. Investing in PPF provides security and tax benefits, while SIP can help increase capital over the long term. A balanced mix of both can strengthen an investment portfolio.
Related Posts
Rohit P
My name is Rohit Pal, and I have been working in the field of journalism for the past five years. During this time, I have written on a variety of topics, including business, automobiles, technology, and politics. I have worked with several major organizations and am currently working with Timesbull.
Related Stories
Business
Education
Business
latest news
Auto
Business
Auto
Education
Business
Business