SIP vs PPF Comparison: If you are looking for long-term investment options that will help you accumulate wealth for future financial needs, Systematic Investment Plans (SIP) and Public Provident Fund (PPF) may be beneficial for you. Both differ from each other in various aspects, like maximum, minimum investment amount, maturity period, etc.
What is SIP?
SIP is a market-linked investment scheme and hence carries a higher level of risk.
- Market-linked long-term investment option.
- Allows investors to invest a fixed amount in mutual funds.
- No lock-in period, investor gets to choose
What is PPF?
PPF is a government-backed scheme that offers guaranteed returns, and hence it is considered a safe investment plan.
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- Government-backed scheme
- Can invest annually and get stable returns.
- Maturity and lock-in period is 15 years
What is the minimum and maximum amount to invest in an SIP?
One can start investing in SIP with as low as Rs 500 per month. There is no maximum limit for investing.
What is the minimum and maximum amount to invest in PPF?
The minimum amount to invest in the Public Provident Fund is Rs 500 per financial year. The maximum amount that can be invested in this investment option per year is Rs 1.5 lakh.
Public Provident Fund interest rate 2025
This government-backed scheme offers an interest rate of 7.1 percent.
Interest rate offered by the SIP
Since SIPs are market-linked investments, returns are not fixed and can fluctuate. But we are assuming a 12 per cent annual return rate for these calculations.
Which investment gives better returns: SIP or PPF?
But which investment option can create a higher corpus in 15 years with a Rs 1,25,000/year investment? Let’s compare them to find –
SIP calculation conditions: Rs 1,25,000/year investment for 15 years
Suppose you are investing Rs 1,25,000 per year in a SIP mutual fund at a 12 per cent annualised return rate for 15 years. This means you are investing Rs 10,417 each month.
PPF calculation conditions: Rs 1,25,000/year investment for 15 years
Suppose you are investing Rs 1,25,000 per year in PPF at a 7.1 per cent fixed interest rate.
PPF vs SIP: Which can create higher corpus?
Now, can you guess which investment option can generate a larger corpus in 15 years? Let’s calculate and find.
SIP calculation for Rs 1,25,000 annual investment: How much will I get after 15 years in SIP?
As per the calculation, your total investment will amount to Rs 18,75,060 in 15 years. The capital gains earned in these years would be Rs 30,82,717. And the total corpus generated at the end of 15 years would be approximately Rs 49,57,777.
Systematic Investment Plan Returns (with 12% annual interest rate):
- Monthly investment: Rs 10,417
- Total investment (15 years): Rs 18,75,060
- Estimated returns: Rs 30,82,717
- Total value: Rs 49,57,777
What is the corpus after 15 years in PPF with Rs 1.25 lakh investment?
As per the calculation, your total investment will amount to Rs 18,75,000 in 15 years. The interest earned would be Rs 15,15,174. With this, the final corpus will be around Rs 33,90,174.
PPF Returns (with 7.1% annual interest rate):
- Annual Investment: Rs 1,25,000
- Total Investment (15 years): Rs 18,75,000
- Estimated Returns: Rs 15,15,174
- Total Corpus: Rs 33,90,174
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning.)