Which is best investment ppf or sip? (2024)

Who is better PPF or SIP?

PPF is less liquid. You can only withdraw the investment amount after the 7th year from the date of opening your PPF account. SIPs are prone to a higher level of risk as they are influenced by equity market performance. PPF offers guaranteed returns and is, therefore, a safer investment option.

PPF deposits have a lock-in period of 15 years. Whereas your investment in mutual funds (open-ended) can be redeemed on any business day. The flexibility of redeeming your funds as per the requirement makes mutual funds investment much more liquid than PPF deposits.

For instance, PPF is a long-term investment, you will not be able to get access to the money before 15 years from the date of investment, as PPF comes with a maturity period of 15 years. However, if an investor wants to continue their PPF investment after the maturity period can do so for a block of 5 years and so on.

PPF is good option for tax savings purpose under section 80 C of income tax. Investors who are in tax slab rate of 30 % will benefit more by saving in taxes. If you want to invest other than 80 C then SIP in mutual fund is best option for long term of 15 years .

SIPs can be one of the best tax-saving instruments with high returns on your investments. You can claim a deduction of up to Rs. 1.5 lakh from your taxable income for investing in ELSS through SIPs under Section 80(C) of The Income Tax Act, 1961.

If one continues to invest Rs 1.5 lakh/year for another five years, then PPF balance will reach approx. Rs 1 crore in 25 years. This, it is indisputable that PPF is still the Best available investment instrument for reasons stated above.

Finance Guru Speaks: Yes, you can invest in PPF through SIP or Systematic Investment Plan as you normally do in Mutual Funds Investments.

PPF is a risk-free investment, backed by the Government of India. There is a minimum investment amount for a PPF account, which is a sum of Rs. 500.

Which bank is best for PPF account?

About SBI PPF Account

State Bank of India (SBI), which is the largest bank in the country, offers the PPF scheme with a good interest rate. SBI has over 15,000 branches in India, therefore, getting access to the scheme is easy. Opening of the PPF account offered by SBI can also be done online.

Tenure: The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish. Investment Limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or in a maximum of 12 instalments.

Due to its combination of safety, returns, and tax benefits, the Public Provident Fund (or PPF) scheme is one of the most popular long-term saving-cumulative-investment options. For the quarter ending June 30, 2022, the PPF interest rate is 7.1 percent per annum.

For instance: If you plan on investing Rs 5000 a month for 12 months with an expected rate of return of 15%, the ELSS SIP Calculator will be able to calculate the maturity value of your SIP. Your cumulative investment will be worth Rs 60,000 (INR 5000*12 months). The maturity value of this SIP will be Rs 65,106.

SIPs have losses

But as the market keeps falling and you continue to invest your average cost fall. You will be buying more units at a lesser cost. The primary advantage of SIP is to lower the average cost of buying mutual funds. SIPs work well in a falling market condition or volatile markets.

Systematic Investment Plan is a better investment option in comparison to Fixed Deposit especially if you consider the flexibility of investment, advantage of diversification, tax benefits, and higher returns. That is why it is better to invest in a systematic investment plan than in fixed deposit.

Which SIP is best for 3 years?

Even for monthly PPF deposits, it is best to make the payments before the fifth of every month since interests are calculated from the fifth. This will give the investor the opportunity to maximise income.

It is a government-backed safe savings avenue. The money deposited in a PPF account is utilised by the Government for its budgetary purposes and interest is deposited by the Government as well. There is hence less risk of default in case of PPF. Given the relatively low risk, the returns are stable.

The PPF calculates interest on the lowest balance in the month between the 5th of each month to the end of the month. Depositing your money on or before the 5th of the month and you could benefit on the interest added on your contribution before the 5th of the month.

SIP is a very safe method to invest in mutual funds. If you invest in a mutual fund lump sum, depending on the market condition, you could end up paying a very high price for a mutual fund. To avoid this, you should invest in mutual funds when the markets are not overvalued.

In terms of liquidity, a SIP is better when compared to RD. SIP can be closed and the money can be withdrawn without any penal charges. Recurring Deposit amount or the interest earned on it are not exempted from tax.

SIP returns for various mutual funds may vary. On an average, for large cap equities, a return of 12-18% can be expected whereas from mid-cap equities, a return of 14-17% is expected. However, in case of a long-term debt-based mutual fund, one can expect a return of 6 – 9 % p.a.

PPF New Rule

An individual can not have multiple PPF accounts under his or her name, according to the PPF rules, 2019.

The interest rate on PPF is revised by the Government on a quarterly basis. The current interest rate is 7.1%. The PPF interest rate for the first quarter of 2022 remains unchanged.

Can I do SIP in PPF account?

Finance Guru Speaks: Yes, you can invest in PPF through SIP or Systematic Investment Plan as you normally do in Mutual Funds Investments.

Public Provident Fund (PPF) is one of the most preferred long-term investment instruments among the investors who have zero risk appetite. In this investment, the investor not only manages an assured return but also gets income tax exemption on investment up to Rs. 1.5 lakh in a particular financial year.

State Bank of India (SBI), which is the largest bank in the country, offers the PPF scheme with a good interest rate. SBI has over 15,000 branches in India, therefore, getting access to the scheme is easy.

In terms of liquidity, a SIP is better when compared to RD. SIP can be closed and the money can be withdrawn without any penal charges. Recurring Deposit amount or the interest earned on it are not exempted from tax.

SIP is a very safe method to invest in mutual funds. If you invest in a mutual fund lump sum, depending on the market condition, you could end up paying a very high price for a mutual fund. To avoid this, you should invest in mutual funds when the markets are not overvalued.

SIP returns for various mutual funds may vary. On an average, for large cap equities, a return of 12-18% can be expected whereas from mid-cap equities, a return of 14-17% is expected. However, in case of a long-term debt-based mutual fund, one can expect a return of 6 – 9 % p.a.

The current interest rate on PPF is 7.1% (for the quarter ending June 30, 2021), which is higher than 6.8% offered on other small savings schemes like the National Savings Certificate (NSC) and 6.7% offered on Post Office 5-year Time Deposit.

Public Provident Fund PPF investment is low risk because it is backed by the Government of India.

Even for monthly PPF deposits, it is best to make the payments before the fifth of every month since interests are calculated from the fifth. This will give the investor the opportunity to maximise income.

How much I get after 15 years in PPF?

PPF New Rule

An individual can not have multiple PPF accounts under his or her name, according to the PPF rules, 2019.

Some schemes of the post office are far better, when it comes to tax savings and returns. Take the case of the PPF. The interest is exempt from tax, apart from this one also gets tax benefits under Sec 80C. The interest rates of 7.1 per cent, offered currently are unmatched by banks, which makes it very attractive.

SIPs have losses

But as the market keeps falling and you continue to invest your average cost fall. You will be buying more units at a lesser cost. The primary advantage of SIP is to lower the average cost of buying mutual funds. SIPs work well in a falling market condition or volatile markets.

You will have to select the Pause SIP option and you could pause your SIPs for a minimum period of one month to a maximum period of six months. Some AMCs allow you to pause SIPs for a maximum of three months.