SIP vs PPF: Which can offer higher returns with Rs 9,500 annual investment in 15 years?
SIP and PPF are popular investment options, but which builds a larger corpus with Rs 9,500 annually in 15 years? SIP offers higher returns with market risks, while PPF ensures stability with tax benefits.
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When it comes to long-term savings, investors often weigh the benefits of Systematic Investment Plans (SIPs) in mutual funds against the Public Provident Fund (PPF). Both options cater to different financial goals, but which one can build a larger corpus with an annual investment of Rs 9,500 in 15 years? Here’s a closer look at their returns and risk factors.
SIP: Market-Linked Growth with Higher Returns
SIPs allow investors to contribute fixed amounts into mutual funds, benefiting from rupee cost averaging and compounding over time.
Key Features:
- Investments are made monthly, deducted automatically.
- Returns depend on market performance.
- Suitable for investors with a higher risk appetite.
Example Returns (Assuming 12% Annual Growth):
- Monthly Investment: Rs 790
- Total Contribution (15 Years): Rs 1,42,200
- Estimated Returns: Rs 2,56,415
- Total Corpus: Rs 3,98,615
While SIPs offer higher growth potential, returns fluctuate with market conditions.
PPF: Safe Returns with Tax Benefits
PPF, backed by the government, provides fixed interest rates and is ideal for risk-averse investors.
Key Features:
- Current Interest Rate: 7.1% (compounded annually).
- Tenure: 15 years, extendable in 5-year blocks.
- Tax Benefits: Interest and maturity proceeds are tax-free under Section 80C.
Example Returns:
- Annual Investment: Rs 9,500
- Total Contribution (15 Years): Rs 1,42,500
- Estimated Returns: Rs 1,15,153
- Total Corpus: Rs 2,57,653
PPF ensures stability, but its growth potential is lower than equity investments.
Which Investment is Better?
- SIP Advantage: Higher return potential, suitable for those comfortable with market risks.
- PPF Advantage: Guaranteed returns with tax benefits, ideal for conservative investors.
For those seeking long-term wealth creation, SIPs may offer better returns despite market volatility. However, if stability and tax-free guaranteed returns are a priority, PPF remains a reliable option.
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05:59 PM IST
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