💰 SIP vs PPF: Which One Yields More Over 15 Years?

Kokila Chokkanathan
Investing ₹90,000 annually can grow significantly over time—but which option is better: SIP (Mutual Funds) or PPF (Public Provident Fund)? Let’s break it down with calculations and comparisons.

1️⃣ What is SIP?

  • SIP (Systematic Investment Plan) lets you invest regularly in mutual funds
  • Returns are market-linked, typically averaging 12–15% annually for equity-oriented funds
  • Offers flexibility and liquidity
2️⃣ What is PPF?

  • PPF (Public Provident Fund) is a government-backed savings scheme
  • Fixed interest, currently around 7.1% per annum (compounded annually)
  • Investment tenure: 15 years, tax-free interest, low risk
3️⃣ Assumptions for Comparison

  • Annual investment: ₹90,000
  • Duration: 15 years
  • SIP expected return: 12% per annum
  • PPF interest rate: 7.1% per annum
4️⃣ 15-Year Returns Calculation

PPF:

  • Using compound interest formula:
  • Maturity value ≈ ₹23–24 lakh
SIP (Equity Mutual Fund):

  • Using CAGR 12% assumption:
  • Maturity value ≈ ₹43–44 lakh
💡 Observation: SIP yields almost double the returns of PPF over 15 years, but comes with market risk.

5️⃣ Pros and Cons

Feature

SIP

PPF

Returns

Higher, market-linked

Fixed, lower

Risk

Moderate to high

Very low, government-backed

Liquidity

Partial withdrawal possible

Limited, premature withdrawal rules

Taxation

Equity gains: tax-free after 1 year (for long-term)

Fully tax-free

6️⃣ Bottom Line

  • If your goal is maximum wealth accumulation and you can tolerate risk, SIP is better.
  • If you prefer safe, guaranteed returns with tax benefits, PPF is ideal.
  • Many investors use both: PPF for safety and SIP for growth.
Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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