Public Provident Fund is a government scheme and currently gives 7.1% guaranteed interest. The SIP market is linked there. Through this, investment is made in mutual funds.
Today, there are many options available in terms of investment. But who wants to invest where, it is the individual’s choice. Some people like safe investments, so they invest money in government guaranteed schemes. At the same time, some people want to earn more money in less time and for this they do not shy away from taking risks in the market.
PPF and SIP are two such schemes. Public Provident Fund is a government scheme and currently gives 7.1% guaranteed interest. The SIP market is linked there. Through this, investment is made in mutual funds. The interest in SIP is not fixed, but experts believe that on an average, interest is available in SIP at the rate of 12 percent. The benefit of compounding interest is available in both PPF and SIP. In such a situation, if you have to invest to become a millionaire, then which scheme will make you a millionaire first? Understand on the basis of calculation.
PPF
First let’s talk about PPF. This government scheme matures in 15 years, but if you want, you can extend it in a block of 5 years. Apart from this, you can invest a maximum of Rs 1.5 lakh annually in this scheme. Suppose you invest Rs 1.5 lakh in it annually, then you will have to invest Rs 12,500 monthly. In such a situation, you will invest Rs 22,50,000 in 15 years and on maturity you will get Rs 40,68,209.
Now if you extend it once for 5 years i.e. invest for 20 years, then your investment will be Rs 30,00,000 and at the rate of 7.1 percent you will get Rs 66,58,288 and if you extend it once for another 5 years That is, if you invest continuously for 25 years, you will have to invest a total of Rs 37,50,000 in 25 years at a monthly investment of Rs 12,500 and then on maturity you will get Rs 1,03,08,015. In this way you will be able to become a millionaire in 25 years.
SIP
Now talking about SIP, there is no limit on investment time period and investment amount in SIP. You can invest in it as long as you want and as much as you want. Whenever you want, you can increase or decrease your invested amount according to your income. But if you spend Rs 12,500 per month i.e. Rs 1.5 lakh annually, then you will have to invest continuously for 19 years.
Your total investment in 19 years will be Rs 28,50,000 and you will get Rs 1,09,41,568 at 12 percent return. Whereas in PPF, if you invest Rs 37,50,000, you are getting Rs 1,03,08,015 as return. In such a situation, you are getting less investment and better returns on SIP and if luck favors you and you get returns of 15 percent, then you can become a millionaire sooner.
