SIP vs EPF vs PPF Calculator: Which investment can help generate highest retirement corpus on Rs 8,333 monthly contribution for 25 years; know here
EPF vs SIP vs PPF: Employees' Provident Fund (EPF), Public Provident Fund (PPF) and Systematic Investment Planning (SIP) in mutual funds are three methods to generate a retirement corpus. While EPF and PPF are non- market-linked, SIP is market-linked.
EPF vs SIP vs PPF: Retirement planning is a long-term investment where one can invest regularly to create a corpus that can meet their requirements. Individuals can invest in non-market-linked and market-linked investment programmes. The selection of either investment depends on their risk appetite and the types of returns they want to meet their financial goals. Employees Provident Fund (EPF), Public Provident Fund (PPF), and Systematic Investment Plan (SIP) in mutual funds are three popular ways to create a retirement corpus. While EPF and PPF are non-market-linked, SIP is market-linked. In this write-up, know how 3 are different from each other and what will be the estimated corpus on a Rs 8,333 monthly investment in each of them.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for retirement planning)
EPF
In EPF, the employee and the employer contribute to the EPF account of the former. The minimum monthly contribution is Rs 1,800 and the maximum can be 12 per cent of the basic salary and dearness allowance (DA) of the employee. The EPF subscriber can contribute till the age of 60.
EPF
At the age of 58 years, and under some specific conditions, they can withdraw the retirement corpus. The current interest rate in EPF is 8.25 per cent. The EPF subscriber's invested money up to Rs 1.50 lakh in a financial year, the interest earned, and the maturity amount are tax-free.
PPF
A PPF account can be opened in a bank or a post office. PPF offers a 7.1 per cent interest rate. The scheme has a lock-in period of 15 years. Other than that, the maximum limit to invest in a financial year is Rs 1.50 lakh.
PPF
On completion of 15 years, the PPF account holders can extend their account for unlimited blocks of 5 years each with or without contribution. Like EPF, PPF also offers tax benefits on contributions up to Rs 1.50 lakh in a financial year, the interest earned, and the maturity amount.
SIP
SIP is a method to invest in mutual funds. An investor can invest a fixed amount every month through SIP in a mutual fund scheme. Some mutual funds allow SIPs as small as Rs 100. Most of the mutual fund schemes offer Rs 500 SIP.
SIP
One can set the SIP amount as per their investment capacity and corpus goal. They can increase or decrease the SIP amount, and can also opt for a step up SIP, where they increase the percentage of SIP every year. In the long term, SIP investment can help an investor generate a large corpus.
EPF: Retirement corpus after Rs 8,333 monthly investment for 25 years
On a Rs 8,333 monthly investment, the total investment in 25 years will be Rs 25 lakh, and the estimated corpus will be Rs 82,08,309.67.
PPF: Retirement corpus after Rs 8,333 monthly investment for 25 years
The estimated PPF corpus on a Rs 8,333 monthly investment will be Rs 68,71,735.1.
SIP: Retirement corpus after Rs 8,333 monthly investment in equity funds for 25 years
Since returns in SIP are not fixed, we are assuming 12 per cent annualised returns in equity funds, 10 per cent in hybrid funds, and 8 per cent in debt funds.
In equity, a Rs 8,333 monthly investment for 25 years can give an estimated corpus of Rs 1,41,84,487.
SIP: Retirement corpus after Rs 8,333 monthly investment in hybrid funds for 25 years
In a hybrid fund, at 10 per cent annualised growth, the estimated corpus will be Rs 1,03,59,249.
SIP: Retirement corpus on Rs 8,333 monthly investment in debt funds for 25 years
In a debt fund, at 8 per cent annualised growth, the estimated corpus will be Rs 76,23,357.