ELSS vs PPF: Want to make more money? This investment option is better for you

ELSS vs PPF: ELSS (Equity Linked Saving Schemes) and PPF (Public Provident Fund) are mainly known as a retirement-oriented savings options and ultimately serve the same purpose - make your money grow. Most of the investment experts say that for investors who want flexibility in investment, best option is PPF, while those who want better returns along with tax savings should go for the ELSS option. As per the investment experts, PPF is a guaranteed return option offered by the Indian government while the ELSS is a bunch of companies' shares offered by the Mutual Fund houses. In PPF interest return is announced every quarter while in ELSS, the return is subject to stock market performance. Currently, in PPF rate of return is 8 per cent while in ELSS schemes investment experts say an investor should invest for a longer period say 10 years or above. In such case, the last five year data suggests that an investor can expect at least 12 per cent return on his or her investment from ELSS.

Speaking on the difference between ELSS and PPF, Vikas Puri, Vice President at Quant Capital said, "PPF is purely a retirement purpose investment where an investor is assured of a guaranteed return by the Government of India while in case of ELSS, the offer is from the Mutual Funds houses and they make their portfolio by taking a bunch of shares. So, a Mutual Funds investor is indirectly investing in the stock market and his or her return is subject to market performance." However, he said that Mutual Funds manage their portfolio and in last five year data, one can easily find that it gives at least 12 per cent return if the investment is for more than 10 years.

Standing in sync with Vikas Puri's views on ELSS and PPF, Kartik Jhaveri, Director — Wealth Management at Transcent Consultants said, "Age factor plays a major role while choosing ELSS or PPF but it's better to diversify one's investment and put some amount of your investment in PPF and some into ELSS. If an investor's age is low, he or she can take more risk and hence can enhance investment in ELSS but they should also invest in PPF because PPF is an assured guaranteed return and the assurance is from the Government of India itself." However, he said that in long-term, ELSS gives more return than the PPF saying, "IT's better to earn more and give tax rather saving tax with lesser income."