SIP Vs PPF: What ₹1.45 Lakh Yearly Can Grow Into Over 15, 25 & 35 Years
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When it comes to building a secure financial future, many Indian investors often find themselves torn between two popular options: the Public Provident Fund (PPF) and the Systematic Investment Plan (SIP). Both strategies cater to long-term goals, but they differ in structure, returns, and risk. While PPF offers government-backed safety with fixed interest, SIP investments in mutual funds come with market-linked returns. But how do these options compare when one invests ₹1.45 lakh annually for 15, 25, and 35 years?
According to experts, understanding the power of compounding in both instruments can help make more informed investment decisions. Let’s break down the data and see which path delivers a more rewarding retirement corpus in the long run.
In contrast, the PPF is a government-supported savings scheme that ensures a fixed interest return. It comes with a 15-year lock-in and can be extended in blocks of five years. The current interest rate on PPF stands at 7.1% annually, compounded annually. Its safety and tax-free maturity make it a favourite for conservative investors.
Over 15 years:
Maturity Amount – ₹39.32 lakh
Total Interest Earned – ₹17.57 lakh
Over 25 years:
Maturity Amount – ₹99.64 lakh
Total Interest Earned – ₹63.39 lakh
Over 35 years:
Maturity Amount – ₹2.19 crore
Total Interest Earned – ₹1.68 crore
These calculations assume a consistent 7.1% annual return throughout the period, which is not fixed and can be revised quarterly by the government.
At 12% Annual Return (Hybrid Fund)
At 10% Annual Return (Equity Fund)
If safety and assured growth are your priorities, PPF is your go-to. But if you’re ready to weather market fluctuations for a potentially higher return, SIPs could be more rewarding—especially over 25–35 years.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investment decisions should be made after consulting a qualified financial advisor. All calculations are estimates and subject to change based on market performance and government policy.
According to experts, understanding the power of compounding in both instruments can help make more informed investment decisions. Let’s break down the data and see which path delivers a more rewarding retirement corpus in the long run.
Understanding The Basics: SIP And PPF
A SIP enables investors to invest a fixed sum regularly—usually monthly—into mutual fund schemes. These could be equity, hybrid, or debt funds, depending on one’s risk appetite. Over time, SIPs benefit from rupee cost averaging and compounding, making them attractive for long-term wealth creation.In contrast, the PPF is a government-supported savings scheme that ensures a fixed interest return. It comes with a 15-year lock-in and can be extended in blocks of five years. The current interest rate on PPF stands at 7.1% annually, compounded annually. Its safety and tax-free maturity make it a favourite for conservative investors.
PPF: How Much Does ₹1.45 Lakh Yearly Yield?
Let’s evaluate the maturity value if ₹1.45 lakh is invested every year.Over 15 years:
Maturity Amount – ₹39.32 lakh
Total Interest Earned – ₹17.57 lakh
Over 25 years:
Maturity Amount – ₹99.64 lakh
Total Interest Earned – ₹63.39 lakh
Over 35 years:
Maturity Amount – ₹2.19 crore
Total Interest Earned – ₹1.68 crore
These calculations assume a consistent 7.1% annual return throughout the period, which is not fixed and can be revised quarterly by the government.
SIP Returns: Equity, Hybrid And Debt Fund Projections
For SIP comparisons, we assume a monthly investment of ₹12,083 (i.e. ₹1.45 lakh annually). Here’s how the investment could grow based on different types of mutual funds with estimated annual returns of 8%, 10%, and 12%.At 12% Annual Return (Hybrid Fund)
- 15 years: ₹57.50 lakh (Capital Gains: ₹35.75 lakh)
- 25 years: ₹2.05 crore (Capital Gains: ₹1.69 crore)
- 35 years: ₹6.65 crore (Capital Gains: ₹6.15 crore)
At 10% Annual Return (Equity Fund)
- 15 years: ₹48.52 lakh
- 25 years: ₹1.50 crore
- 35 years: ₹4.13 crore
- 15 years: ₹41.05 lakh
- 25 years: ₹1.10 crore
- 35 years: ₹2.60 crore
What Should You Choose?
According to financial experts, the right choice depends largely on the investor’s risk appetite, financial goals, and investment horizon. PPF suits those seeking capital protection and guaranteed returns. SIPs, meanwhile, are ideal for those with higher risk tolerance who aim for inflation-beating growth.If safety and assured growth are your priorities, PPF is your go-to. But if you’re ready to weather market fluctuations for a potentially higher return, SIPs could be more rewarding—especially over 25–35 years.
Long-Term Planning: Start Early, Stay Consistent
Regardless of the instrument chosen, one key takeaway is the value of starting early. As the figures demonstrate, a delay of even five years can significantly reduce the final corpus due to the missed power of compounding. Whether you choose SIP or PPF, consistency and patience play a crucial role in wealth accumulation.Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investment decisions should be made after consulting a qualified financial advisor. All calculations are estimates and subject to change based on market performance and government policy.
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