SIP vs PPF: What will be your maturity amount if you invest Rs 1,20,000 a year in both for 20 years?

Compare SIP and PPF returns on a Rs 1,20,000 retirement corpus invested over 20 years. Understand their benefits, risks, and tax implications to make an informed financial planning decision.  

ZeeBiz WebTeam | Dec 04, 2024, 03:25 PM IST
View in App

Planning for retirement requires choosing the right investment option to grow your wealth. Public Provident Fund (PPF) and Systematic Investment Plan (SIP) are two popular options, each offering unique benefits. While PPF guarantees tax-free returns and safety, SIP provides the potential for higher returns through mutual funds. This article compares their performance on a Rs 1,20,000 corpus over 20 years, detailing returns, tax benefits, and key features to help you decide the best fit for your financial goals.  

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)

1/10

Understanding Public Provident Fund (PPF)

Understanding Public Provident Fund (PPF)

  • Investment Limits: Minimum Rs 500 and maximum Rs 1,50,000 per financial year.

  • Loan Facility: Available from the 3rd to the 6th financial year.
  • Withdrawal: Permissible every year from the 7th financial year.
  • Maturity Period: Fifteen complete financial years from the account's opening.

2/10

Benefits of PPF Investment

Benefits of PPF Investment

  • Extension Option: Extend for 5-year blocks with deposits after maturity.

    Indefinite Retention: Retain account post-maturity without deposits at prevailing interest rates.
  • Legal Protection: Amount is not subject to court attachment orders.
  • Tax Benefits: Deposit qualifies for Sec. 80C deductions; interest earned is tax-free under Sec. 10.

3/10

PPF Returns on Rs 1,20,000 Corpus

PPF Returns on Rs 1,20,000 Corpus

  • Investment Amount: Rs 24,00,000 (Rs 1,20,000 annually for 20 years).

  • Total Interest: Rs 29,26,631.
  • Maturity Value: Rs 53,26,631.

4/10

Understanding Systematic Investment Plan (SIP)

Understanding Systematic Investment Plan (SIP)

  • SIP involves investing a fixed amount at regular intervals in mutual funds.

  • Encourages small, consistent investments rather than lump-sum deposits.

5/10

How SIP Works

How SIP Works

  • The investment amount is auto-debited and used to purchase mutual fund units at the NAV rate.

  • Additional units are added to your account with each installment, compounding returns over time.

6/10

SIP Returns on Rs 1,20,000 Corpus (at 8% Interest)

SIP Returns on Rs 1,20,000 Corpus (at 8% Interest)

  • Investment Amount: Rs 24,00,000 (Rs 1,20,000 annually for 20 years).

  • Estimated Returns: Rs 35,30,751.
  • Maturity Value: Rs 59,30,751.

7/10

SIP Returns on Rs 1,20,000 Corpus (at 10% Interest)

SIP Returns on Rs 1,20,000 Corpus (at 10% Interest)

  • Investment Amount: Rs 24,00,000.

  • Estimated Returns: Rs 51,60,300.
  • Maturity Value: Rs 75,60,300.

8/10

SIP Returns on Rs 1,20,000 Corpus (at 12% Interest)

SIP Returns on Rs 1,20,000 Corpus (at 12% Interest)

  • Investment Amount: Rs 24,00,000.

  • Estimated Returns: Rs 72,83,848.
  • Maturity Value: Rs 96,83,848.

9/10

Key Differences: SIP vs PPF

Key Differences: SIP vs PPF

  • Risk Factor: PPF offers guaranteed returns; SIP is market-linked and carries risk.

  • Tax Benefits: PPF returns are tax-free; SIP returns are subject to capital gains tax.
  • Flexibility: SIP offers greater flexibility in investment amounts and intervals.

10/10

Which Option Suits You?

Which Option Suits You?

  • PPF: Ideal for risk-averse investors seeking guaranteed returns and tax benefits.

  • SIP: Better for those comfortable with market risks aiming for higher returns.

Next
Gallery

297% return in 5 years: This real estate stock hits 52-week high after Nomura initiates 'buy' call - Check target

By accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

x