PPF vs Mutual Fund SIP: What will be your returns on a Rs 7,500 monthly investment over 15 years
Explore the differences between PPF and Mutual Funds and find out how much a Rs 7,500 monthly investment over 15 years could yield in returns, considering risk, tax benefits, and growth potential.
When planning long-term investments, it’s important to evaluate options like Public Provident Fund (PPF) and Mutual Funds (MFs). Both offer unique advantages in terms of returns, risk, and tax benefits. While PPF is a government-backed savings scheme with fixed interest, Mutual Funds are market-driven and offer potentially higher returns but with more risk. If you invest Rs 7,500 monthly for 15 years, how much could you expect to gain from each? Let's break down the key factors and potential returns.
Investment Options
- Investors have various options to suit different goals like market returns, low risk, liquidity, and tax benefits.
- Public Provident Fund (PPF) and Mutual Funds (MFs) are two common options in India.
- Both serve different purposes and are not directly comparable.
Mutual Funds
- Professionally managed investment pool allocating funds to shares, bonds, government securities, money market instruments, gold, etc.
- Designed by Asset Management Companies (AMCs) to match risk profiles and investment goals.
- Returns are market-linked and depend on the performance of underlying assets.
PPF
- Long-term savings scheme guaranteed by the Government of India.
- Encourages savings with a moderate interest rate and tax benefits.
- The interest rate is around 8% per annum (subject to change by government policies).
Tax Benefits
- Mutual Funds: Taxation varies based on the scheme and investment period.
- PPF: Tax-free up to Rs 1,50,000 under Section 80C. Interest and maturity amounts are tax-exempt (exempt-exempt-exempt tax treatment).
Maturity Period
- Mutual Funds: No fixed tenure. Investors can exit by selling units.
- PPF: Fixed maturity period of 15 years.
PPF: What will be your returns on a Rs 7,500 monthly investment over 15 years?
Invested amount: Rs 13,50,000
Estimated Return: Rs 10,62,181
Total Value: Rs 24,12,181
Mutual Fund SIP: What will be your returns on a Rs 7,500 monthly investment over 15 years
Invested amount: Rs 13,50,000
Estimated Return: Rs 24,34,320
Total Value: Rs 37,84,320