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People have different investment options and preferences for the same. Some focus more on guaranteed schemes while some prefer high-risk options. Let’s take a look at how much return is possible after 15 years of investing in PPF or SIP of 10,000 a month.
All capital invested in PPF is guaranteed as the government covers this scheme. On the other hand SIP is a mutual fund investment opportunity wherein returns are contingent on market performance.
The PPF maturity period is set at a 15 year threshold and payments are made in accordance to the interest decided by the government, which is 7.1% per annum at the moment.
As for SIP, while returns over the last couple of years have been promising with a lot of buzz surrounding it, there is no safety net for guaranteed returns, hence variability for returns exists due to market volatility.
As the name SIP suggests, one can start investing at any point but financial consultants highly recommend it for long term investment purposes.
Which Investment Option Gives More Returns After 15 Years?
PPF’s interest calculation seems more promising and lucrative within that timeframe.
If someone invests 10,000 PPF every month. They would, afterwards, will have invested 1,20,000 in that singular year. In the long run over the 15 years, the PP total investment reaches staggering 18 lakhs.
Returns: With an interest rate at 7.1% per annum, the amount of interest accrued after 15 years will be ₹14,54,567. The total amount at maturity is ₹32,54,567.
SIP Calculation:
SIP is a method of investing which has implications of market risks, but experts suggest that it has the potential provide an average return of 12% per year. Let's assume that you invest ₹10,000 every month in SIP. After one year the total amount would be ₹1,20,000, and over 15 years this will increase to ₹18,00,000.
At an average return of 12% per annum, the interest accrued will be ₹32,45,760. The total investment amount combined with the interest amount will come to ₹50,45,760 at maturity.
Which One Is Better?
SIP will give more returns compared to PPF if both investments are put in for the same duration. In general, the selection of one or the other depends on the individual’s net worth and amount of risk one is willing to take. A decision of such magnitude should always be preceded by the consultation of a financial advisor.
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