How Much Money Can You Make From Rs 1 Lakh? SIP Vs. PPF

Mutual Fund SIPs and Public Provident Fund (PPF) are both very popular choices of investments. While one offers market-linked returns, the other is backed by the government.

PPF is a government scheme which has a current interest rate of 7.1% per annum, compounded on an annual basis. It comes with a lock-in period of 15 years, and investors can invest up to Rs 1.5 lakh at a yearly basis.

Mutual fund SIPs, on the other hand, offer higher return potential and they typically offer higher interest when invested over the long term, especially in equity mutual funds. But they are risky, as the returns they offer depend on the market conditions.

Where Can Rs 1 Lakh Be Invested For The Best Returns?

According to Chartered Accountant Suresh Surana while comparing Mutual Fund SIP with a PPF for an annual investment of Rs 1,00,000 over a span of 15 years, the 'better' option is to depend on the taxpayer's financial goals, risk appetite, and how the investor views returns versus tax benefits.

Equity mutual funds in India on average provide 10-15% annualised returns, sometimes higher, owing to their compounding as well as rupee cost average, he said, which mitigates market ups and downs.

But under PPF, the returns are modest but guaranteed, he said, adding that it falls within the tax-free bracket as both the interest and maturity amount are fully tax-exempt under the Exempt-Exempt-Exempt (EEE) regime.

Which one of these is a better investment really depends on the financial goals of the investor, he added.

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