SIP vs PPF: Which can create higher corpus with Rs 1,33,000 annual investment for 15 years?
Compare SIP and PPF for a Rs 1,33,000 annual investment over 15 years; features, benefits and returns.
A Systematic Investment Plan (SIP) and Public Provident Fund (PPF) are popular investment options for long-term financial goals. SIP involves regular investments in mutual funds, benefiting from market-linked growth and compounding. In contrast, PPF is a government-backed small savings scheme providimg guaranteed returns and tax benefits. Both have unique advantages, but which option can generate a higher corpus for Rs 1,33,000 investment a year over 15 years? This analysis breaks down the returns and the estimated target.
What is SIP?
A method of investing a fixed amount regularly in mutual funds, benefiting from market fluctuations over time.
How Does SIP Work?
- Fixed amounts are auto-debited from your bank account and invested in mutual funds.
- Investments accumulate units based on the mutual fund's Net Asset Value (NAV).
- Returns grow through compounding and market movements.
Benefits of SIP
- Low Initial Investment: Start with as little as Rs 500 per month.
- Market Averaging: Reduces the risk of market timing by spreading investments.
- Disciplined Approach: Encourages consistent saving and investing habits.
SIP returns for Rs 1,33,000 annual investment over 15 years
- Invested Amount: Rs 19,80,000
- Total Interest Earned: Rs 35,70,336
- Maturity Value: Rs 55,50,336
What is PPF?
A government-backed savings scheme offering guaranteed returns with fixed interest rates and tax benefits.
PPF Key Features
- Interest Rate: 7.1% per annum (compounded annually).
- Investment Limits: Minimum Rs 500; Maximum Rs 1.5 lakh per year.
- Tenure: 15 years, extendable in 5-year blocks.
- Tax Benefits: Tax-free interest under Section 80C.
PPF Returns for Rs 1,33,000 Annual Investment Over 15 Years
- Invested Amount: Rs 19,95,000
- Total Interest Earned: Rs 16,12,146
- Maturity Value: Rs 36,07,146
Key Comparison
SIP: Rs 55,50,336
PPF: Rs 36,07,146
Interest Earned Comparison
SIP: Rs 35,70,336
PPF: Rs 16,12,146
SIP vs PPF
SIP offers a significantly higher corpus, leveraging market-linked returns, while PPF provides guaranteed returns with tax benefits.