SIP vs PPF: In today’s era, as difficult as it is to earn, it is more challenging to save that income and invest it in the right place. In this era of inflation, people’s budget often gets spoiled in the last days of the month. But, for financial security, what matters more than your salary is how much you save and how you put those savings to work.
Choosing the right investment option for future needs has always been a big dilemma. Generally people consider Public Provident Fund (PPF) to be the safest, whereas now Systematic Investment Plan (SIP) has made its own identity in terms of wealth creation. Today we will tell you through statistics that if you save Rs 7,500 per month, then which scheme will give you more profits in the next 15 years.
Small savings will create big fund
If your annual savings is Rs 90,000 i.e. Rs 7,500 per month. There are two ways to invest it, either you invest the money in PPF in lump sum or invest it in SIP at the rate of Rs 7,500 every month. Both are excellent options for regular investment, but there is a huge difference in their returns over a period of 15 years. During this entire period, the total principal amount that will go out of your pocket is only Rs 13.5 lakh.
How much return will you get in PPF
First of all let’s talk about Public Provident Fund i.e. PPF. This scheme is considered best for those people who do not want to take any kind of risk on their money. If you deposit Rs 90,000 in this account every year continuously for 15 years, then the interest rate should be calculated according to the current 7.1 percent.
You get government protection on this investment, but because the interest rate is fixed, the pace of money growth remains a little slow. According to the calculation, after 15 years, after adding interest on your total deposit amount (Rs 13.5 lakh), you will get a fund of approximately Rs 24.4 lakh.
The amount in SIP will increase three times
Now let’s talk about mutual fund SIP. The risk here is slightly higher, but the return possibilities are equally strong. If you put the same Rs 90,000 per year (i.e. Rs 7,500 per month) in SIP, the mathematics changes completely.
Considering the historical performance of the stock market, an average annual return of 12 percent can be assumed for the long term. Accordingly, if you deposit Rs 7,500 every month for 15 years, the power of compounding shows its effect. After 15 years, your total fund can reach approximately Rs 37.8 lakh.
Read this also- This scheme of Post Office is amazing, you will earn Rs 4.5 lakh only from interest.
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