PPF Vs SIP: Which Builds Bigger Wealth In 15 Years With ₹1.25 Lakh Yearly Investment?

For individuals aiming to build long-term wealth in India, two of the most commonly considered investment options are the Systematic Investment Plan (SIP) in mutual funds and the Public Provident Fund (PPF). Both carry distinct benefits and risks, making them suitable for different types of investors. While one offers market-linked growth potential, the other provides government-backed security. According to financial experts, understanding the differences in risk, returns and maturity terms is essential before choosing the best option for future financial needs.

Understanding the Basics of SIP

A SIP is essentially a disciplined way of investing in mutual funds. Investors contribute a fixed amount monthly, and over time, the power of compounding and market growth can generate substantial wealth.

Key features of SIP include

• Flexible investment amounts, starting as low as Rs 500 per month.

No upper limit, making it suitable for high earners.

No mandatory lock-in, except in tax-saving funds.

Market-linked growth, with the potential for 10–12 per cent or more annualised returns over the long term.

However, being tied to equity markets, SIP returns can fluctuate, meaning the risk factor is higher compared with guaranteed-return products.

What Makes PPF Attractive?

The Public Provident Fund is a government-backed scheme designed for individuals seeking steady and safe returns. It is particularly popular with conservative investors due to its guaranteed interest rate and tax benefits.

Key features of PPF include

• Minimum annual contribution of Rs 500, with a maximum of Rs 1.5 lakh per financial year.

A fixed maturity period of 15 years, with the option to extend in blocks of five years.

An interest rate of 7.1 per cent (as of 2025), reviewed quarterly by the government.

Contributions eligible for tax deductions under Section 80C.

While secure, the capped maximum investment and fixed rate of return limit the corpus growth compared with market-linked instruments.

Comparing SIP and PPF: A 15-Year Investment Scenario

To highlight the difference, financial experts often use illustrations with a fixed annual contribution. Suppose an investor allocates Rs 1.25 lakh per year to either SIP or PPF for 15 years.

• SIP Projection: With an assumed annualised return of 12 per cent, the total investment of Rs 18.75 lakh could grow to nearly Rs 49.6 lakh. This includes capital appreciation of over Rs 30 lakh due to compounding and market performance.
  
  
• PPF Projection: With the same contribution, the total invested amount of Rs 18.75 lakh would yield a maturity corpus of approximately Rs 33.9 lakh at the current interest rate of 7.1 per cent.
  
  

The outcome clearly shows SIP generating a much larger corpus than PPF, though the risk element remains significant.

Which Option Should Investors Choose?

According to financial advisors, the choice between SIP and PPF depends primarily on risk appetite, investment goals, and liquidity needs.

• Choose SIP if: You are comfortable with short-term volatility for potentially higher long-term gains. It is more suited for wealth creation, especially if retirement or children’s education is the goal.

Choose PPF if: You prefer assured returns, tax savings, and do not mind funds being locked in for 15 years. It works best as a stable, low-risk component of a diversified portfolio.

Many experts recommend using a combination of both—SIP for aggressive growth and PPF for safety and tax benefits.

The Bottom Line

While SIPs have the potential to deliver significantly higher wealth over 15 years compared with PPF, they also come with risks linked to market fluctuations. PPF, though safer, cannot match the same level of growth due to its capped interest rate.

Therefore, the decision should be based on individual financial goals. Conservative savers may prioritise PPF, while those targeting substantial long-term wealth creation may lean towards SIPs—or even better, combine both for balance.

Disclaimer: This article is for informational purposes only. Readers are advised to consult certified financial planners or investment experts before making financial decisions.