SIP vs PPF: Which is Better for Long-Term Savings?
SIP vs PPF: Which is Better for Long-Term Savings?
If you want to save money for the long term, both Systematic Investment Plan (SIP) and Public Provident Fund (PPF) are good options. But which one suits you best? Let’s compare them with an example.
What is SIP?
SIP is an investment method where you put money into mutual funds regularly. It is linked to the stock market, so the returns can go up or down. On average, SIPs give around 12% returns over the long term.
What is PPF?
PPF is a government savings scheme that provides fixed and safe returns. You can invest up to ₹1.5 lakh per year, and it offers a 7.1% interest rate per year. However, the money is locked in for 15 years.
Investment Comparison (₹1 Lakh Per Year for 15 Years)
SIP Returns
- Total investment: ₹14,99,940
- Estimated return: 12% per year
- Total amount after 15 years: ₹39,65,936
- Profit earned: ₹24,65,996
PPF Returns
- Total investment: ₹15,00,000
- Fixed interest: 7.1% per year
- Total amount after 15 years: ₹27,12,139
- Interest earned: ₹12,12,139
Which One Should You Choose?
- SIP gives higher returns but is risky because it depends on the stock market.
- PPF is safer because it offers fixed returns backed by the government.
If you are comfortable with risk and want higher returns, SIP is a better choice. But if you prefer safety and guaranteed growth, PPF is a good option.
