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PPF vs SIP with Rs 1,00,000/year investment: Which can create higher corpus in 15 years?
- Written by Ankit Kumar
Published: Zee Business| Updated: Zee Business
SIP vs PPF Comparison: SIP is a market-linked investment scheme, while PPF is a government-backed savings scheme. Both are popular long-term investment options that help investors build wealth for future financial needs. However, they differ significantly in terms of returns, risk profile, liquidity, investment limits and maturity structure.
Minimum investment amount: To start investing through a SIP, an investor can begin with as little as Rs 500 per month. In the case of PPF, the minimum investment required is Rs 500 per financial year, making both options accessible to small investors.
Maximum investment amount: There is no upper investment limit for SIPs, allowing investors to scale their investments as income grows. For PPF, however, the maximum investment is capped at Rs 1.5 lakh per financial year, as per government rules.
Note: SIPs are market-linked investments, so their returns are not fixed and can fluctuate. However, for these calculations, we're assuming a 12 per cent annual rate of return. PPF is a government scheme that offers an interest rate of 7.1 per cent.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning.)
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SIP vs PPF Comparison
1/10Suppose you are investing Rs 1,00,000 per year in a SIP mutual fund at a 12 per cent annualised return rate for 15 years. This means you are investing around Rs 8,333 each month. Now, assume you are investing the same amount every year in a Public Provident Fund account, which offers a fixed interest rate of 7.1 per cent. Based on these assumptions, let us compare which investment option can help you build a higher corpus over the long term.
2/10
PPF vs SIP: Which one can generate more corpus?
2/10So, which investment option is likely to create a bigger corpus over 15 years - SIP or PPF? With an annual investment of Rs 1,00,000 in both options, let us break down the numbers and see how the returns stack up over the long term.
3/10
SIP investment of Rs 1,00,000 annually: How much money do you need to invest every month?
3/10As per the calculations, investing Rs 1,00,000 per year in a SIP translates to a monthly investment of around Rs 8,333. Over a 15-year period, the total amount invested through SIP would come to approximately Rs 15,00,000.
4/10
SIP investment of Rs 1,00,000 annually: How much capital gain can be earned after 15 years?
4/10Based on an assumed annualised return of 12 per cent, the SIP investment is expected to generate capital gains of approximately Rs 26,75,000 over a 15-year period.
5/10
SIP investment of Rs 1,00,000 annually: How much money can I get after 15 years in SIP?
5/10At the end of the 15-year investment period, the total corpus generated through SIP would be approximately Rs 41,75,000.
6/10
SIP investment calculations (with 12% annual interest rate)
6/10Monthly investment: Rs 8,333
Total investment (15 years): Rs 15,00,000
Estimated returns: Rs 26,75,000
Total value: Rs 41,75,000
7/10
PPF investment of Rs 1,00,000 annually: Total amount to be invested in 15 years
7/10As per the calculations, if you invest Rs 1,00,000 every year in a PPF account for 15 years, the total investment would be Rs 15,00,000, which is the same amount invested in the SIP scenario above.
8/10
PPF investment of Rs 1,00,000 annually: How much interest will be earned after 15 years?
8/10At an assumed annual interest rate of 7.1 per cent, the PPF investment is expected to earn interest of approximately Rs 10,35,000 over a 15-year period.
9/10
PPF investment of Rs 1,00,000 annually: How much money can I get after 15 years in PPF?
9/10At the end of the 15-year maturity period, the total corpus generated through PPF would be approximately Rs 25,35,000.
10/10
PPF investment calculations (with 7.1% annual interest rate)
10/10Annual investment: Rs 1,00,000
Total investment (15 years): Rs 15,00,000
Estimated returns: Rs 10,35,000
Total corpus: Rs 25,35,000
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