PPF vs SIP With Rs 55,000/year investment: Which can create larger corpus in 15 years?
SIP vs PPF: Systematic Investment Plan and Public Provident Fund are two long-term investment options that help to generate a substantial corpus for future needs. Both are different from each other. In this write-up, we will learn more about them and compare their return for an investment of Rs 55,000 per year over 15 years.
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PPF vs SIP: Systematic Investment Plan (SIP) and Public Provident Fund (PPF) are two long-term investment options that help to generate a substantial corpus for future needs. Both are different from each other. In this write-up, we will learn more about them and compare their return for an investment of Rs 55,000 per year over 15 years.
What is an SIP?
SIP is an investment option that allows investors to invest a fixed amount in mutual funds at regular intervals (usually every month). The interval can be monthly, quarterly, or yearly.
What is PPF?
Public Provident Fund or PPF is a long-term investment scheme in which one can invest annually and get stable returns. Its maturity period is 15 years.
SIP vs PPF: Key Difference
- SIP is a market-linked investment while PPF is a government-backed scheme.
- In PPF, one can invest a maximum of Rs 1.5 lakh/year. In contrast to this, people can invest any amount (not less than Rs500) in SIP based on their financial capacity
- SIP offers an average long-term return of 12 per cent. While PPF offers a fixed interest rate of 7.1 per cent.
- SIP has no lock-in period. PPF has a lock-in period of 15 years.
SIP vs PPF: How Much Corpus Can You Generate in 15 Years?
Let's assume you are investing Rs 55,000 per year in SIP and PPF for 15 years. Now, which investment option can generate a larger corpus in these years? Let's calculate and find.
SIP Investment Calculation: How Much Corpus Will You Generate in 15 Years with Rs 55,000 Annual Investment?
If you invest Rs 55,000 yearly in SIP (Rs 4,583 per month), your total investment will amount to Rs 8,24,940 in 15 years. Assuming an average annual return of 12 per cent, the total corpus generated at the end of 15 years would be approximately Rs 23,12,472, including Rs 14,87,532 as capital gains.
SIP Returns (with 12% annual interest rate):
- Monthly investment: Rs 4,583
- Total investment (15 years): Rs 8,24,940
- Estimated returns: Rs 14,87,532
- Total value: Rs 23,12,472
PPF Investment Calculation: How Much Will Your Corpus Grow in 15 Years with Rs 55,000 Annual Investment?
If you invest Rs 55,000 per year in a PPF, your total investment over 15 years will also amount to Rs 8,25,000. However, with an annualised return of 7.1 per cent, the interest earned would be Rs 6,66,677. With this, the final corpus would be around Rs 14,91,677 (principal + interest).
PPF Returns (with 7.1% annual interest rate):
- Annual Investment: Rs 55,000
- Total Investment (15 years): Rs 8,25,000
- Estimated Returns: Rs 6,66,677
- Total Corpus: Rs 14,91,677
SIP Investment Summary -
PPF Investment Summary -
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning.)
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