PPF vs SIP: With Rs 90,000 annual investment for 15 years, which option can build larger corpus?

When it comes to long-term savings, choosing the right investment route can make a big difference. Two popular options for Indian investors—Systematic Investment Plan (SIP) and Public Provident Fund (PPF)—offer different benefits. But if you invest Rs 90,000 every year for 15 years, which one will create a larger corpus?

SIP: Market-Linked Returns with Growth Potential

A Systematic Investment Plan, or SIP, allows you to invest a fixed amount regularly in mutual funds. Instead of putting in a large sum at once, you invest smaller amounts at regular intervals—usually monthly. This method not only brings discipline to investing but also helps in averaging out market volatility.

Here’s how it works?

A fixed amount, say Rs 7,500 per month (which totals Rs 90,000 annually), is auto-debited from your bank account and invested in mutual funds.

You get mutual fund units based on the fund’s Net Asset Value (NAV) at the time of investment.

Over time, your investment benefits from compounding and potential market growth.

The flexibility of SIP allows you to increase, decrease, or pause investments, depending on your financial situation. It suits individuals with a moderate to high risk appetite who are focused on long-term goals.

If you invest Rs 7,500 every month for 15 years:

• Total investment: Rs 13,50,000
• Estimated returns: Rs 22,19,485
• Final corpus: Rs 35,69,485

(assuming an average return of 12% per annum)

PPF: Guaranteed Returns with Tax Benefits

The Public Provident Fund, or PPF, is a government-backed savings scheme designed for long-term wealth building. It offers fixed returns, is completely risk-free, and comes with tax benefits.

Key features of PPF:

• It currently offers an interest rate of 7.1% per annum, compounded annually.
• The minimum yearly contribution is Rs 500, and the maximum is Rs 1.5 lakh.
• The lock-in period is 15 years, with the option to extend in blocks of 5 years.

Investments qualify for tax deduction under Section 80C, and both the interest earned and the final maturity amount are tax-free.

For someone who wants to avoid market-linked risk and is looking for assured returns, PPF is a solid option.

If you invest Rs 90,000 every year for 15 years:

• Total investment: Rs 13,50,000
• Estimated returns: Rs 10,90,926
• Final corpus: Rs 24,40,926

SIP vs PPF

If your priority is higher returns and you are comfortable with market fluctuations, SIP could help you build a significantly larger corpus over 15 years. On the other hand, if safety and guaranteed returns are more important to you, PPF offers peace of mind with stable growth and tax benefits.

In numbers, SIP may give you around Rs 11 lakh more than PPF over the same period with the same annual investment. However, the right choice depends on your financial goals and risk appetite.