SIP vs PPF: Rs 1,10,000/year investment for 30 years; which can build a higher retirement corpus
Not sure whether to invest in SIP or PPF for your retirement? Both are great options, but which one will give you more money in the long run? Let’s compare them. If you invest Rs 1,10,000 every year for 30 years, which scheme will help you build a bigger retirement fund? Let’s find out.
Harish and Geeta, two friends in their 30s, were enjoying coffee when the topic of retirement savings came up. Harish trusted PPF because it offered safety and guaranteed returns. Geeta, however, preferred SIP, hoping for higher growth. Curious to see which option worked better, they both invested Rs 1,10,000 per year for 30 years. Years passed, and their investments grew. Now, it’s time to find out who built a bigger retirement fund. This comparison can also help you decide which option, PPF or SIP, can give you a higher return.
Photos source: Pixabay/Representational
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is SIP?
A Systematic Investment Plan (SIP) is an investment scheme that allows you to invest a fixed amount regularly.
What is PPF?
PPF (Public Provident Fund) is a long-term savings scheme backed by the government of India. It is a safe investment option that offers guaranteed returns with tax benefits.
Tax benefits in PPF
Investments, interest earned, and withdrawals are tax-free under Section 80C.
What is current interest rate in PPF?
As of February 2025, the Public Provident Fund (PPF) in India offers an interest rate of 7.1% per annum, compounded annually. This rate has remained unchanged since April 2020.
What is minimum investment amount to start SIP?
The minimum amount to invest in an SIP is Rs 100. One can also increase, decrease, or stop their SIP.
What is minimum investment in PPF?
The minimum deposit in a financial year is 500, whereas the maximum is Rs 1.5 lakh.
How does SIP work?
When you invest in a SIP, a fixed amount of money is automatically taken from your bank account at regular intervals (like every month). This money is then invested in a mutual fund, and you receive units based on the fund's current value (NAV).
How does PPF work?
This scheme, run by post offices and banks, offers voluntary contributions to its account holders. Post Office offers a 7.1 per cent interest rate compounded yearly.
PPF calculation conditions
Yearly investment: Rs 1,10,000 (monthly investment Rs 9166 x 12 months)
Time period: 30 years
Rate of interest: 7.1 per cent
PPF: What will be your retirement corpus in 30 years with Rs 1,10,000/year investment?
On Rs 1,10,000/year contribution, the estimated retirement corpus in 30 years will be Rs 1,13,30,668.
SIP calculation conditions
Since SIP investments don't have fixed returns, we're using estimated annual returns of 8 per cent for debt funds, 10 per cent for equity funds, and 12 per cent for hybrid funds. We're also assuming a monthly investment of Rs 9,166 (1,10,000/12)
SIP: Retirement corpus on Rs 9,166 monthly investment for 30 years (hybrid fund)
At 12 per cent annualised return, the estimated corpus in 30 years will be Rs 2,82,40,200. During that time, the invested amount will be Rs 32,99,760, and capital gains will be Rs 2,49,40,440.
SIP: Retirement corpus on Rs 9,166 investment for 30 years (equity fund)
At 10 per cent annualised return, the estimated corpus in 30 years will be Rs 1,90,58,797. The estimated capital gains will be Rs 1,57,59,037.
SIP: Retirement corpus on Rs 9,166 investment for 30 years (debt fund)
At 8 per cent annualised return, the estimated corpus in 30 years will be Rs 1,29,93,843. The estimated capital gains will be Rs 96,94,083.