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?

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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.

Also Read: Power of Compounding: In how many years your Rs 22,222 monthly investment will grow to Rs 10 crore, Rs 11 crore, Rs 12 crore corpus?

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.