Generally investors look for safe investments that can give them assured income, guaranteed returns and income tax benefits. PPF is one of popular schemes for such investments. But many investors rush to buy mutual funds through SIPs as they expect to get higher returns from there. Here, we will tell you which option can help you reach faster to your goal of Rs 2 crore corpus.
PPF vs SIP: Smart Investing is a time-tested tool to gain good returns in short time. However, investment is a long-term game and those who stick to their investments for long duration are likely to gain more than those who are panicked by market fluctuations. If you follow the strategies of smart investing, you can accumulate wealth as much as Rs 2 crore. Is it possible through investment in PPF or something else? Read more to know that!
Financial planners say that an investment of Rs 200 daily i.e. Rs 6,000 in a month is enough to achieve a sizeable corpus at the time of retirement.
If we look at this figure for one year, it comes to Rs 72,000. Now, if Rs 72,000 are invested somewhere… generally people find PPF safe as it offers guaranteed returns and assured income, plus it also give people tax exemption up to rs 150,000.
Surely, one can get good returns and safe investment is PPF. But, what Public Provident Fund (PPF) can not do easily, SIP can do and help you accumulate Rs 2 crore.
The calculation is given below.
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15 years of investment in PPF
A conservative investor invests their money in government guaranteed instruments like Public Provident Fund (PPF).
Its specialty is that the money invested, the interest received on it, and the entire amount received on maturity are tax free.
If you invest Rs 6,000 every month in PPF, your investment in a year will be Rs 72,000.
By investing regularly, this amount will be Rs 19 lakh 52 thousand 740 in a period of 15 years.
Fifteen years is the minimum maturity limit of PPF.
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If you invest money in PPF for 20 years…
If you keep depositing this amount in PPF for 20 years, the amount will be Rs 31 lakh 95 thousand 978 lakh.
Now if we extend it for 5 more years, we will get Rs 49 lakh 47 thousand 847.
The thing to note here is that PPF is a safe investment.
But, its interest rate is fixed every three months.
Here, we have calculated the current interest rate according to 7.1 per cent only.
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If you invest Rs 6000/month in SIP
If you deposit your money in a mutual fund SIP every month for 25 years and get a return of 10 per cent, the value of your investment will be Rs 80 lakh 27 thousand 342 at maturity.
Now if you extend the same investment to 30 years, the return you will get will be Rs 1 crore 36 lakh 75 thousand 952.
Now understand the calculation of Rs 2 crore
Experts consider 10 per cent return to be very normal and conservative. It is normal to get 12 per cent returns in diversified funds.
According to this rate, in 25 years this amount will be Rs 1 crore 13 lakh 85 thousand 811, and in 30 years, this money will increase to Rs 2 crore 11 lakh 79 thousand 483.
