PPF vs SIP: Big news for investors or future investors. . A huge fund can be created by investing in both Public Provident Fund (PPF) and Systematic Investment Plan (SIP). PPF is a safe investment platform. On the other hand, the return received in mutual fund SIP depends on the fluctuations of the stock market. Therefore, it is considered less safe.

Both these schemes have become quite popular among investors. Mutual fund SIP has become quite famous among investors due to its better returns. In mutual fund SIP, you get an estimated return of 12 to 14 percent.
Whereas under PPF you get 7.1 percent return. Today we will know that if money is invested in both the schemes for 15 years, then in which you can get better return or which scheme is better for you.

Which one will give you more returns if you invest for 15 years?

If an investor does not want to take any risk then Public Provident Fund ( PPF ) will be right for him. This is a fixed income investment option. This means that before starting the investment, the investor knows how much the money he is investing will grow to in 15 years. If a person is investing in PPF for his children’s higher education, marriage or his retirement, then he knows in advance how much money he will get after maturing the account.

Risk in mutual funds

The equity scheme of a mutual fund invests the investors’ money in the shares of companies. Through SIP, you can invest in the equity scheme of a mutual fund every month or every quarter. There is no maturity in a mutual fund. You can continue investing as long as you want. Since mutual funds invest the investors’ money in shares, there is a risk involved. The return on investment may increase or decrease depending on the fluctuations in the market.

Calculation of PPF returns

Suppose you invest Rs 1,44,000 every year in PPF. You have to make this investment for 15 years. After 15 years the PPF account matures. This means that you will invest Rs 21,60,000 in 15 years. Since the interest rate of PPF is 7.1 percent, after 15 years your money will grow to Rs 39,05,481. This means that you will get a total return of Rs 17,45,481 on your investment.

Calculation of SIP returns

Now let us assume that you invest Rs 12,000 every month in the equity scheme of a mutual fund through SIP. In this way, you will invest a total of Rs 1,44,000 in a year. You will have to make this investment for 15 years. We can assume the annual return of the equity scheme to be 12 percent. In this way, you invest a total of Rs 21,60,000 in 15 years. After 15 years, your money will grow to Rs 57,11,177. In this way, you get a return of Rs 35,51,177 on your investment.

Which one you should choose?

In this way, you get more returns by investing through SIP as compared to investing in PPF. You need to keep two things in mind. First, investing in PPF gives the benefit of deduction. If you use the old regime of income tax, then you can claim this deduction. Second, PPF is a government scheme, due to which it is quite safe. The fluctuations in the stock market do not affect the returns of PPF.

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