SIP vs PPF: Every individual needs to build wealth for their post-retirement life to ensure they can live stress-free and remain financially independent. If you’re looking to accumulate a substantial corpus and are exploring good investment options, then you can consider Public Provident Funds (PPF) or Systematic Investment Plans (SIPs). If you’re wondering what these are, both are popular long-term investment options. PPF is a government-backed savings scheme, and SIP is a market-linked investment plan.

SIP vs PPF: Key Differences

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Here are the basic differences between these two investment options:

  • SIP: With an SIP, you can invest monthly, quarterly, or annually based on your financial capacity. The average long-term return is around 12 per cent.
  • PPF: In a PPF, you can invest up to Rs 1.5 lakh per year, and the maturity period is 15 years. It 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 50,000 per year? Let's find out.

SIP Investment Calculation: How much corpus will you generate in 15 years with Rs 50,000 annual investment?

If you invest Rs 50,000 per year (Rs 4,167 per month), your total investment over 15 years will amount to Rs 7,50,060. Assuming an average annual return of 12 per cent, your corpus at the end of 15 years would be approximately Rs 21,02,568, including Rs 13,52,508 as capital gains.

PPF Investment Calculation: How much will corpus you generate in 15 years with Rs 50,000 annual investment?

If you invest Rs 50,000 per year in a PPF, your total investment over 15 years will also be Rs 7,50,000. However, with an annualised return of 7.1 per cent, the interest earned would amount to Rs 6,06,070. The final corpus would grow to around Rs 13,56,070 (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 7,50,000 13,52,508 21,02,568
PPF 7,50,000 6,06,070 13,56,070

SIP Investment Summary -

 

Year SIP Amt /
Month		 Total Invested
Amt		 Interest Amt /
Year		 Maturity
Value
Year1 4,167 50,004 3,372 53,376
Year2 4,167 1,00,008 13,514 1,13,522
Year3 4,167 1,50,012 31,284 1,81,296
Year4 4,167 2,00,016 57,650 2,57,666
Year5 4,167 2,50,020 93,701 3,43,721
Year6 4,167 3,00,024 1,40,666 4,40,690
Year7 4,167 3,50,028 1,99,928 5,49,956
Year8 4,167 4,00,032 2,73,049 6,73,081
Year9 4,167 4,50,036 3,61,785 8,11,821
Year10 4,167 5,00,040 4,68,117 9,68,157
Year11 4,167 5,50,044 5,94,276 11,44,320
Year12 4,167 6,00,048 7,42,777 13,42,825
Year13 4,167 6,50,052 9,16,453 15,66,505
Year14 4,167 7,00,056 11,18,498 18,18,554
Year15 4,167 7,50,060 13,52,508 21,02,568

 

PPF Investment Summary -

 

Year of deposit Amount deposited Interest earned Year-end Balance
1yr 50,000 3,550 ₹53,550
2yr ₹1,00,000 ₹10,903 ₹1,10,903
3yr ₹1,50,000 ₹22,327 ₹1,72,327
4yr ₹2,00,000 ₹38,112 ₹2,38,112
5yr ₹2,50,000 ₹58,568 ₹3,08,568
6yr ₹3,00,000 ₹84,026 ₹3,84,026
7yr ₹3,50,000 ₹1,14,842 ₹4,64,842
8yr ₹4,00,000 ₹1,51,395 ₹5,51,395
9yr ₹4,50,000 ₹1,94,094 ₹6,44,094
10yr ₹5,00,000 ₹2,43,375 ₹7,43,375
11yr ₹5,50,000 ₹2,99,705 ₹8,49,705
12yr ₹6,00,000 ₹3,63,584 ₹9,63,584
13yr ₹6,50,000 ₹4,35,548 ₹10,85,548
14yr ₹7,00,000 ₹5,16,172 ₹12,16,172
15yr ₹7,50,000 ₹6,06,070 ₹13,56,070

 

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.

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)