If you want to earn good returns by investing your money in the right places, SIP and PPF could be the right option for you. PPF offers fixed returns and zero risk, while SIP offers higher returns but carries higher risk.

Both PPF and SIP are popular investment options for building a large corpus over the long term, but there are significant differences in returns and risk. If an investor invests just ₹2,000 per month, the difference between the corpus created through PPF and SIP after 30 years can be significant. While PPF offers safe and tax-free returns, SIP, being market-based, offers the potential for higher returns. Investing just ₹2,000 per month can build a substantial corpus over 30 years. A PPF corpus can generate around ₹2.4 million, while a SIP corpus can reach over ₹7 million.

Nowadays, everyone wants to invest to secure their future and build a large corpus. However, the biggest question when starting an investment is where to invest money to earn the best returns. Therefore, Public Provident Fund (PPF) and Systematic Investment Plan (SIP) remain the most popular options among investors.

How much fund will be created in PPF

If an investor invests ₹2,000 every month and continues this for 30 years, there can be a significant difference in the corpus generated by both PPF and SIP. PPF is a government scheme, considered a safe investment option. Investments in it receive government-specified interest. Currently, PPF offers an annual interest rate of approximately 7.1%. If a person deposits ₹2,000 every month, or ₹24,000 annually, their total investment amount over 30 years will be ₹7.20 lakh. After adding the interest earned, the total corpus at maturity will be approximately ₹24.72 lakh, of which approximately ₹17.52 lakh will be earned solely from interest. The biggest advantage of PPF is that its investments are completely safe. Furthermore, the interest and maturity amount are tax-free, which is why it is preferred by investors with a low risk appetite.

Investing in SIP

SIP, on the other hand, is an investment option linked to mutual funds. Returns depend on market movements, so they involve risk. However, equity-based SIPs are known to deliver better returns over the long term. If the same investor invests Rs 2,000 per month in a SIP and earns an average annual return of 12%, their total corpus could reach approximately Rs 70.59 lakh after 30 years. The total investment would be only Rs 7.20 lakh, while the estimated return could exceed Rs 63.39 lakh.

However, SIP returns are not fixed, and market fluctuations can impact investments. Factoring in inflation can lower actual returns. Experts say PPF may be a better option for investors seeking safe and stable returns, while SIPs may be more beneficial for investors seeking to build a large corpus over the long term and have a higher risk appetite.

 PC: TV9Bharatvarsh