There are many schemes available for investment today. But, when it comes to investment, all investors want to select the option that gives higher returns. In such a situation, SIP and PPF are very popular schemes for investment. PPF is a government scheme while SIP is linked to the stock market.
Today we will tell you which of these two schemes will be best for you.
PPF
PPF (Public Provident Scheme) scheme is a government scheme. By investing in this scheme, you can accumulate a huge fund. Although the maturity period and lock-in period of this scheme is 15 years, investors can extend it for 5-5 years even after maturity. This scheme gives an annual guaranteed return of 7.1 percent.
This scheme also provides the benefit of tax benefit under section 80C of the Income Tax Act.
- Maturity period – 15 years
- Guaranteed return – 7.1%
SIP
SIP (Systematic Investment Plan) is linked to the stock market. Although it gives an average return of 12 percent, but it also depends on which sector’s SIP you have invested in.
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There is no lock-in period in SIP. You can invest whenever you want and withdraw anytime. In SIP, you have to invest a fixed amount every month.
Let us tell you that you can avail tax benefits in SIP under Section 80 (C) of the Income Tax Act, 1961.
- Returns- Average 12%
- There is no lock-in period
Which scheme is best for you?
If you invest Rs 12,500 every month in PPF, then at maturity i.e. in 15 years, you will have invested up to Rs 22,50,000 and you will get Rs 40,68,209 with interest. At the same time, to become a millionaire, you will have to invest in PPF for 25 years.
If you invest Rs 12,500 monthly in SIP for 19 years, you will get Rs 1,09,41,568 at a return of 12 percent.
In such a situation, with less investment in SIP, you will become a millionaire in less time, whereas in PPF you will have to invest more and that too for a longer period than SIP.
