Know Which Investment Grows Your Retirement Fund Faster News24 –

During their coffee get-together Rohan at age 30 along with his 30-year-old friend Riya discussed retirement plans. Rohan chose the Public Provident Fund (PPF) because of its assured returns yet Riya selected a Systematic Investment Plan (SIP) in mutual funds because she wanted potential elevation in her investment value. The two friends started annual investments of ₹1,10,000 throughout 25 years to determine which option would create the superior retirement fund.

The investments of both friends accumulated during these past years so they are now ready for a final corpus comparison. The comparison of PPF against SIP helps individuals select the better approach for creating substantial wealth over time.

Understanding SIP And PPF

What Is SIP?

Systematic Investment Plans are confirmed approaches to handle funds through mutual fund contributions with a predetermined and normal monetary schedule. By using SIP investors can achieve rupee cost averaging benefits together with compound growth prospects.

Minimum investment: ₹100

The plan allows investors full freedom to change their investment amount and withdraw funds whenever needed. The investment process starts when funds are taken from the bank account then directed to mutual funds using the Net Asset Value.

What Is PPF?

The Public Provident Fund (PPF) is an official government savings program which provides both assured returns and tax deductions to users.

Minimum investment: ₹500 per year

Maximum investment: ₹1.5 lakh per year

The present interest rate stands at 7.1% which applies annually through compounding.

PPF provides tax benefits to investors because their deposits along with interest rates receive exemption under Section 80C.

PPF vs SIP: Retirement Corpus Comparison

PPF Investment (7.1% Annual Return)

Investment: ₹1,10,000 per year for 25 years

Final Corpus: ₹75,59,211

SIP Investment (Estimated Annual Returns)

The calculated corpus from a monthly SIP of ₹9,166 depends on the selection between debt funds or equity and hybrid funds.

The debt fund earnings reached ₹83,85,418 while creating ₹56,35,618 in capital gains.

The investment in Equity Fund resulted in ₹1,13,94,801 with capital gains of ₹86,45,001 (10% return).

The Hybrid Fund Investment Earned ₹1,28,52,625 With ₹1,56,02,425 As Capital Gains

Which Option Is Better?

Pension Fund is known for providing guaranteed safety along with predictable returns which makes it an appropriate saving vehicle. One who accepts the risks of higher potential returns can create a considerably bigger retirement fund through SIP investments in equity and hybrid funds.

The decision between these options depends on how much risk people are willing to take along with their financial objectives and their established investment approaches.