When it comes to securing the future and growing wealth, the two most popular names come to the lips of every investor – the first is PPF (Public Provident Fund) and the second is SIP (Systematic Investment Plan). A period of 15 years is generally considered an ideal time to accomplish financial goals. But the biggest and common question remains that if we invest continuously for 15 years, which scheme will give us the maximum and safest funds? Let us understand its complete mathematics through data. 1. PPF: Safe Investment and Guaranteed Returns PPF is a very popular and completely safe savings scheme of the Government of India, which has a mandatory 'lock-in period' of 15 years. Interest Rate: Currently the government is giving interest on it at the rate of 7.1% per annum. Tax Benefits: This scheme comes under EEE (Exempt-Exempt-Exempt) category, that is, the investment made in it, the interest received and the entire maturity amount is completely tax-free. Risk: There is no market risk (Zero Risk) in this, due to which your principal and interest remain completely safe. 2. SIP: Inflation-beating and strong returns. Through SIP in mutual funds, you invest a fixed small amount every month in stock market related schemes. Although it is subject to market risks, history shows that it proves to be the best wealth creator in the long run. Expected Returns: According to financial experts, equity mutual funds are expected to give an average return of 12% per annum or more over a long period of 15 years. Tax: Capital gains tax is payable on SIP profits as per rules. Calculation on investment of ₹ 10,000 per month in 15 years Let us assume that you invest ₹ 10,000 every month i.e. ₹ 1,20,000 annually. Your total investment in 15 years will be ₹18,00,000. Let us see what the final returns of this investment will be: PPF (7.1% fixed interest): Total investment: ₹18,00,000 Interest earned: ₹14,54,567 Total amount on maturity: ₹32,54,567 SIP (12% expected return): Total investment: ₹18,00,000 Profit earned: ₹32,45,760 Total amount on maturity: ₹50,45,760 Conclusion: What is better for you? It is clear from these figures that in a period of 15 years, SIP can give you about ₹ 18 lakh more returns than PPF. If you do not want to take any risk and prefer tax-free guaranteed returns, then PPF is a great option for you. But if you want to grow your money faster by beating inflation, then investing in SIP will prove to be a wiser decision.
