Both PPF and SIP are popular investment options to build a big corpus in the long run, but there is a big difference between the two in terms of returns and risk. If an investor invests only Rs 2,000 every month, then after 30 years there can be a huge difference in the funds generated through PPF and SIP. While PPF offers safe and tax-free returns, SIP, being market-based, offers the potential for higher returns. By investing just Rs 2,000 every month, a big fund can be created in 30 years. A corpus of around Rs 24 lakh can be created in PPF, whereas the estimated fund in SIP can reach more than Rs 70 lakh.
In today’s time, every person wants to invest to secure the future and create a big fund. However, while starting investment, the biggest question is where to invest the money so that one can get better returns. In such a situation, Public Provident Fund (PPF) and Systematic Investment Plan (SIP) remain the most popular options among investors.
How much fund will be created in PPF
If an investor invests Rs 2,000 every month and continues it for 30 years, then there can be a big difference in the funds generated in both PPF and SIP. PPF is a government scheme, which is considered a safe investment option. In this, interest fixed by the government is available on investment. At present around 7.1% annual interest is being received on PPF. If a person deposits Rs 2,000 every month i.e. Rs 24,000 annually, then his total investment amount in 30 years will be Rs 7.20 lakh. After adding the interest received on this, the total fund on maturity can be around Rs 24.72 lakh. Of this, approximately Rs 17.52 lakh will be earned only from interest. The biggest feature of PPF is that the investment in it is completely safe. Also, the interest and maturity amount received in this is tax-free. This is why investors with low risk appetite prefer it.
Investing in SIP
On the other hand, SIP is an investment option related to mutual funds. In this, the return depends on the movement of the market, hence there is risk in it also. However, equity based SIP is known to give better returns in the long run. If the same investor invests Rs 2,000 every month in SIP and gets an average annual return of 12%, then after 30 years his total fund can reach around Rs 70.59 lakh. The total investment in this will be only Rs 7.20 lakh, while the estimated return can be more than Rs 63.39 lakh.
However, returns in SIP are not fixed and market fluctuations can affect the investment. At the same time, if inflation is taken into account, the actual return may be less. According to experts, PPF can be a better option for investors who want safe and stable returns, while SIP can prove to be a more profitable deal for investors who want to build a bigger fund in the long run and take more risk.
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