SIP vs PPF: If you want to invest money for long term, then both SIP and PPF are good options. However, with this simple calculation, understand which can give bumper returns by investing ₹ 5,000 every month in SIP or PPF for 15 years.
SIP vs PPF: Both SIP and PPF can prove to be effective for long term investment. If you also want to invest in either of the two or are confused whether to invest money in SIP or PPF, then this news is for you. Before knowing the complete calculation of interest rate, return and maturity, let us briefly understand what is the difference between SIP and PPF.
Know about PPF
PPF means Public Provident Fund. This is a government scheme. There is a guarantee from the government in this, hence one can invest in PPF without any tension. PPF account matures in 15 years. At present, interest rate of 7.1% per annum is being offered on investment in PPF. You can invest up to Rs 1.5 lakh in PPF in a financial year. Note that if you withdraw money before the maturity of the account, the money will be returned to you after deducting 1% of the interest. In this you also get tax exemption of up to Rs 1.5 lakh every year.
What is SIP?
SIP means Systematic Investment Plan. You can invest in mutual funds through SIP. The effect of market fluctuations is visible on SIP. Generally, investing in SIP can give an average return of 12%. Experts believe that to make a good fund through SIP, you should make long term investments.
SIP vs PPF: If you invest Rs 5000 every month, who will get bumper returns after 15 years?
By investing Rs 5000 in PPF every month, you will invest Rs 60,000 annually. If you do this continuously for 15 years, you will deposit a total of Rs 9 lakh in the PPF account. According to the annual return of 7.1%, you will get interest of ₹ 7,27,284 in 15 years. The investment and interest amount will be given together in the amount received on maturity. In this case, the total value received will be ₹ 16,27,284.
Whereas if you invest Rs 5000 every month in SIP for 15 years, then you will invest a total of Rs 9 lakh in it. Suppose you get a return of 12%, according to this calculation you will get only interest of ₹ 16,22,880 in 15 years. On maturity, you will get interest and investment amount together, which will be ₹ 25,22,880. Keep in mind, due to market fluctuations, SIP returns may be more or less.
According to the complete calculation, if you invest in PPF and SIP for 15 years, then you can get more returns from SIP than PPF. However, before investing anywhere, please consult your financial advisor. In such a situation, you can plan your investment in a better way.
