EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus

EPF vs SIP vs PPF Calculator: Employees' Provident Fund (EPF), mutual fund systematic investment plan (SIP) and Public Provident Fund (PPF) are some popular ways to create a retirement corpus.

While PPF and EPF provide fixed interest rates and significant tax benefits, SIP is a market-linked investment method that can provide a comparatively higher return than the EPF and PPF.

Know more about all 3 investment options and how a monthly investment of Rs 12,000 can pan out in all 3 schemes. 

EPF

Employees in the private sector invest in EPF, which provides an interest rate of 8.25 per cent.

Employees with a minimum basic salary of Rs 15,000 are eligible to invest in the scheme.

The minimum monthly contribution for an employee in EPF is Rs 1,800, while the maximum is 12 per cent of the basic pay and dearness allowance (DA).

The other advantage is that the employer also contributes an equal amount to the account of the employee.

From the employer's contribution, 3.67 per cent goes to the employee's EPF account, while 8.33 per cent goes to their Employees' Pension Scheme (EPS).

The employee gets a monthly pension post retirement from the EPS contribution.

Investments up to Rs 1.50 lakh in a financial year provide tax benefits to the employee under Section 80C of the Income Tax Act, 1961.

The interest earned and the maturity amount are tax-free. 

PPF

The scheme, run by post office and banks, offers voluntary contributions to its account holders.

Post Office offers 7.1 per cent interest rate compounded yearly.

The minimum investment is Rs 500, while the maximum is Rs 1.50 lakh in a financial year.

It has a lock-in period of 15 years.

After that duration, one can take an extension of 5 years of unlimited blocks with or without contribution.

Like in EPF, investment in PPF up to Rs 1.50 lakh in a financial year provides tax benefits under Section 80C of the Income Tax Act.

The interest earned and maturity are also tax-free.

SIP

SIP is a method to invest in mutual funds.

It allows one to invest a prefixed amount daily, monthly, quarterly, or yearly in a mutual fund scheme.

One can increase, decrease, or stop SIP.

The minimum amount to invest in an SIP is Rs 100.

Most mutual funds offer a Rs 500 SIP. One can also opt for a step up SIP, where they can increase the SIP amount periodically.

SIP investors in equity funds don't need to time market as it provides rupee-cost averaging. 

EPF: Retirement corpus on Rs 12,000 investment for 30 years

The invested amount in 30 years will be Rs 43,20,000, and the estimated retirement corpus will be Rs 1,84,89,110.47.

PPF: Retirement corpus on Rs 12,000 investment for 30 years

On a Rs 12,000 monthly contribution, the retirement corpus in 30 years will be Rs 1,48,32,874.

SIP investment conditions

Since there are no fixed returns in SIP investment, we are calculating as per annualised returns of 8 per cent (debt fund), 10 per cent (hybrid fund) and 12 per cent (equity fund) 
 

SIP: Retirement corpus on Rs 12,000 investment for 30 years (equity fund)

At 12 per cent annualised growth, the estimated corpus in 30 years will be Rs 3,69,71,679.

SIP: Retirement corpus on Rs 12,000 investment for 30 years (hybrid fund)

At 10 per cent annualised growth, the estimated corpus in 30 years will be Rs 2,49,51,513.

SIP: Retirement corpus on Rs 12,000 investment for 30 years (debt fund)

At 12 per cent annualised growth, the estimated corpus in 30 years will be Rs 1,70,11,359.