EPF vs SIP vs PPF: Which can give highest return on Rs 12,500 monthly investment in 15 years; know calculations

EPF is a scheme for private sector employees, where both the employee and the employer contribute monthly. The EPF subscriber gets 8.25 per cent interest rate compounded yearly on these contributions, and in the long term, it helps them build a sizeable corpus. An employee can contribute till the age of 60 to their EPF account. 

After 10 years of service, or at 58 years of age, the EPF subscriber gets the option to withdraw their money. Here, two things are important to know. The minimum EPF contribution from the employee's side is Rs 1,800, and the maximum is 12 per cent of the employee's basic salary and dearness allowance (DA). At the same time, the employer's contribution goes to EPF and the Employees' Pension Scheme (EPS), which helps an employee get the monthly pension post retirement.

PPF is also used as a retirement scheme, which is run by the post office and banks. The post office provides 7.1 per cent annual interest compounded yearly. The guaranteed return scheme has a lock-in period of 15 years. 

Each year, the PPF account holder can invest a minimum of Rs 500 and a maximum of Rs 1.50 lakh in a financial year. After the lock-in period, the subscriber gets two options: they can withdraw money or extend their investment for unlimited blocks of 5 years each. 

It is a systematic investment in a mutual fund scheme where one invests a predcided amount every month. Daily and yearly SIPs are also available. When you invest through SIP, you purchase net asset value (NAV) units. 

If the market is high, you buy fewer NAVs for the same amount; if the amount is low, you buy more. With SIP investment, an investor doesn't need to time market. It provides rupee-cost averaging and can help one make good gains in the long term. 

Rs 15,000 monthly investment in EPF
Since the scheme provides 8.25 per cent interest, a Rs 12,500 monthly investment in the scheme can help one generate an estimated retirement corpus of Rs 44,95,556.87 in the 15-year time frame.

Since the scheme provides a 7.1 per cent interest rate, the scheme will help one get an estimated interest of Rs 18,18,209 in 15 years, and the estimated maturity amount of Rs 40,68,209.

Since we can't predict return in a mutual fund scheme, for an equity mutual fund, we are considering 12 per cent annualised returns in 15 years. With that return, estimated long-term capital gains will be Rs 36,99,142, and the estimated total amount will be Rs 59,49,142.

If one gets a 10 per cent annualised SIP return in a hybrid fund scheme, their expected long-term capital gains in 15 years will be Rs 27,70,265, and the expected total amount will be Rs 50,20,265. 

If one gets an 8 per cent annualised SIP return in a debt mutual fund scheme, their expected long-term capital gains in 15 years will be Rs 19,97,231, and the expected total amount will be Rs 42,47,231.