For individuals aiming to build a substantial corpus over the next 15 years, Public Provident Funds (PPF) and Systematic Investment Plans (SIPs) emerge as popular long-term investment options. While PPF is a government-backed savings scheme, SIPs are market-linked investment plans. Both options cater to different risk appetites and financial goals, making it essential to understand their features and returns.
When comparing SIPs (₹6,666/month) and PPFs (₹80,000/year), the distinction lies in their nature and returns.
The table below shows a yearly investment of ₹80,000 in PPF with returns of 7.1%. In the 1st year, the total value at the end of the year is ₹85,680. By the end of the 15-year period, the total value stands at ₹21,69,712.
| Year | Amount Deposited in ₹ | Returns @7.1% | Total Value at the end of the year in ₹ |
| 1 | 80,000 | 5,680 | 85,680 |
| 2 | 1,60,000 | 17,444 | 1,77,444 |
| 3 | 2,40,000 | 35,722 | 2,75,722 |
| 15 | 12,00,000 | 9,69,712 | 21,69,712 |
In the table below, we have shown a SIP of ₹6,666 per month, which translates to a total investment of ₹79,992 in the 1-year and in the 2-year would be ₹1,59,984. Assuming a return of 12%, the total value at the end of the year in 1 year is ₹85,387, and in the 15th year, it would be ₹33,63,504 as compounding works its magic over the long term.
| Year | SIP Amount per month in ₹ | Total Amount Invested in ₹ | Returns @12% | Total Value at the end of the year in ₹ |
| 1 | 6,666 | 79,992 | 5,395 | 85,387 |
| 2 | 6,666 | 1,59,984 | 21,619 | 1,81,603 |
| 3 | 6,666 | 2,39,976 | 50,046 | 2,90,022 |
| 15 | 6,666 | 11,99,880 | 21,63,624 | 33,63,504 |
After conducting a comparative analysis, it is evident that over a 15-year period, an SIP investment would generate a total corpus of ₹33,63,504. This includes an investment of approximately ₹12,00,000 and returns amounting to ₹21.63 lakh. On the other hand, if the same ₹12,00,000 were invested in a PPF (Public Provident Fund) at a return rate of 7.1%, the total corpus would grow to ₹21.69 lakh, with gains of ₹9.69 lakh.
Disclaimer: This blog has been written exclusively for educational purposes. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jan 15, 2025, 3:25 PM IST
Team Angel One
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