SIP vs PPF: By investing Rs 90,000 annually, how much retirement wealth can you expect to build in 15 years?
SIP vs PPF: Can you guess how much corpus you will have after 15 years in both investments if you invest Rs 90,000 per year? Let's find out.
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SIP vs PPF: Are you planning to retire in the next 15 years with a substantial corpus in your account? If so then you can consider investing in Public Provident Funds (PPF) or Systematic Investment Plans (SIPs). Both are popular long-term investment options, but they differ in their nature: one is a government-backed savings scheme, while the other is a market-linked investment plan.
What is SIP?
A Systematic Investment Plan (SIP) is a market-linked investment option where returns depend on the performance of the financial markets. You can invest in SIPs on a monthly, quarterly, or annual basis, depending on your financial capacity. The average long-term return from SIPs is around 12 per cent.
What is PPF?
A Public Provident Fund (PPF) is a government-backed savings scheme that guarantees returns. You can invest up to Rs 1.5 lakh per year, and the maturity period is 15 years. Currently, PPF offers an interest rate of 7.1 per cent per annum.
Can you guess how much corpus you will have after 15 years in both investments if you invest Rs 90,000 per year? Let's find out.
SIP Investment Calculation: How much corpus will you generate in 15 years?
If you invest Rs 90,000 per year (Rs 7,500 per month), your total investment over 15 years will amount to Rs 13,50,000. Assuming an average annual return of 12 per cent, your corpus at the end of 15 years would be approximately Rs 37,84,320, including Rs 24,34,320 as capital gains.
PPF Investment Calculation: How much will corpus you generate in 15 years?
If you invest Rs 90,000 per year in a PPF, your total investment over 15 years will also be Rs 13,50,000. However, with an annualised return of 7.1 per cent, the interest earned would amount to Rs 10,90,926. The final corpus would grow to around Rs 24,40,926 (the sum of both the principal and the interest).
Investment Summary (Figures in Rupees)
| Investment Type | Total Investment (15 years) | Capital Gain | Final Corpus |
| SIP | 13,50,000 | 24,34,320 | 37,84,320 |
| PPF | 13,50,000 | 10,90,926 | 24,40,926 |
SIP Investment Summary -
| Year | SIP Amt / Month |
Total Invested Amt |
Interest Amt / Year |
Maturity Value |
| Year 1 | 7,500 | 90,000 | 6,070 | 96,070 |
| Year 2 | 7,500 | 1,80,000 | 24,324 | 2,04,324 |
| Year 3 | 7,500 | 2,70,000 | 56,307 | 3,26,307 |
| Year 4 | 7,500 | 3,60,000 | 1,03,761 | 4,63,761 |
| Year 5 | 7,500 | 4,50,000 | 1,68,648 | 6,18,648 |
| Year 6 | 7,500 | 5,40,000 | 2,53,178 | 7,93,178 |
| Year 7 | 7,500 | 6,30,000 | 3,59,842 | 9,89,842 |
| Year 8 | 7,500 | 7,20,000 | 4,91,449 | 12,11,449 |
| Year 9 | 7,500 | 8,10,000 | 6,51,161 | 14,61,161 |
| Year 10 | 7,500 | 9,00,000 | 8,42,543 | 17,42,543 |
| Year 11 | 7,500 | 9,90,000 | 10,69,611 | 20,59,611 |
| Year 12 | 7,500 | 10,80,000 | 13,36,891 | 24,16,891 |
| Year 13 | 7,500 | 11,70,000 | 16,49,484 | 28,19,484 |
| Year 14 | 7,500 | 12,60,000 | 20,13,135 | 32,73,135 |
| Year 15 | 7,500 | 13,50,000 | 24,34,320 | 37,84,320 |
PPF Investment Summary -
| Year | Amount Deposited (in Rs) | Interest Earned (in Rs) | Closing Balance (in Rs) | |
| 1 | 90,000 | 6,390 | 96,390 | |
| 2 | 90,000 | 13,234 | 199,624 | |
| 3 | 90,000 | 20,563 | 310,187 | |
| 4 | 90,000 | 28,413 | 428,600 | |
| 5 | 90,000 | 36,821 | 555,421 | |
| 6 | 90,000 | 45,825 | 691,246 | |
| 7 | 90,000 | 55,468 | 836,714 | |
| 8 | 90,000 | 65,797 | 992,511 | |
| 9 | 90,000 | 76,858 | 1,159,369 | |
| 10 | 90,000 | 88,705 | 1,338,074 | |
| 11 | 90,000 | 101,393 | 1,529,467 | |
| 12 | 90,000 | 114,982 | 1,734,449 | |
| 13 | 90,000 | 129,536 | 1,953,985 | |
| 14 | 90,000 | 145,123 | 2,189,108 | |
| 15 | 90,000 | 161,817 | 2,440,925 |
Key Considerations:
- SIPs are market-linked, meaning returns are not guaranteed. The 12 per cent return mentioned above is an estimate, and actual returns may vary depending on market conditions.
- PPF offers guaranteed returns, but the interest rate is fixed and lower than that of SIPs.
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