SIP vs PPF: For individuals who want to build a substantial corpus over the next 15 years and are looking for a good investment option, investing in Public Provident Funds (PPF) or Systematic Investment Plans (SIPs) can be considered. Both are popular long-term investment options. However, PPF is a government-backed savings scheme, while SIP is a market-linked investment plan.
SIP vs PPF: Basic Differences
- In an SIP, one can invest monthly, quarterly, or annually, depending on their financial capacity. The average long-term return from SIPs is around 12 percent.
- In PPF, one can invest up to Rs 1.5 lakh per year, and the maturity period is 15 years. It offers an interest rate of 7.1 percent per annum.
Can you guess how much corpus you will have after 15 years in both investments if you invest Rs 80,000 per year? Let’s find out.
SIP Investment Calculation: How much corpus will you generate in 15 years with Rs 80,000 annual investment?
If you invest Rs 80,000 per year (Rs 6,666 per month), your total investment over 15 years will amount to Rs 11,99,880. Assuming an average annual return of 12 per cent, your corpus at the end of 15 years would be approximately Rs 33,63,504, including Rs 21,63,624 as capital gains.
PPF Investment Calculation: How much will corpus you generate in 15 years with Rs 80,000 annual investment?
If you invest Rs 80,000 per year in a PPF, your total investment over 15 years will also be Rs 12,00,000. However, with an annualised return of 7.1 per cent, the interest earned would amount to Rs 9,69,712. The final corpus would grow to around Rs 21,69,712 (the sum of both the principal and the interest).
Investment Summary (Figures in Rupees)
| Investment Type | Total Investment (15 years) | Capital Gain | Final Corpus |
| SIP | 12,00,000 | 21,63,624 | 33,63,504 |
| PPF | 12,00,000 | 9,69,712 | 21,69,712 |
SIP Investment Summary –
PPF Investment Summary –
Key Considerations:
– SIPs are market-linked, meaning returns are not guaranteed. The 12 per cent return mentioned above is an estimate, and actual returns may vary depending on market conditions.
– PPF offers guaranteed returns, but the interest rate is fixed and lower than that of SIPs.
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