By investing money in PPF, one gets the option of saving on Income Tax. PPF investors get interest on deposits and there is no tax on interest income.
PPF vs Mutual Fund: Future planning is not the same for everyone. People adopt investment methods according to future plans. Because some people are in a position to take risks, while others run towards safe investments. If we talk about one example of both the methods, then Mutual Fund is favorite for people in terms of giving higher returns, whereas PPF is one of the best options among safe mediums.
Let us know what is the difference between these two, which of the two is more beneficial and with which scheme you can become a millionaire quickly…
Public Provident Fund (PPF): This is a scheme which not only helps in saving for the future, but also helps in saving income tax. PPF investors get interest on deposits and there is no tax on this interest income. Some of the benefits of PPF scheme are as follows:
Secured by the Government – The investment is guaranteed by the government.
Tax exemption under Section 80C – By investing in PPF, you can avail income tax exemption up to a maximum of Rs 1.50 lakh annually.
Facility to deposit even Rs 500 – You can start investing in PPF with just Rs 500.
interest fixed income
Mutual Fund: The investor invests his money in this, which is managed by professional people. Professionals invest investors’ money in many places as per their convenience, especially in the stock market. These are the benefits of investing money in mutual funds:
- Higher returns
- The fund is managed by professionals.
- SIP as well as Lump Sump options.
- Facility to start even with small amount.
Who is better between the two?
Let us understand with an example… Suppose you want to become a millionaire by investing Rs 10,000 every month. Let us first understand this in the case of PPF. Currently interest on PPF is available at the rate of 7.1 percent. Returns on PPF keep increasing and decreasing. According to the current interest rate, it will take more than 27 years to become a millionaire by investing Rs 10,000 monthly.
Whereas in case of Mutual Fund, one can easily get 12 percent annual return. Because here it also gives the benefit of compounding. If you invest Rs 10,000 every month in this instrument and assume returns of 12 per cent per annum, then you will become a millionaire in 20 years. If we look at 15% return, then this investment will yield Rs 1.75 crore in 20 years. It is worth noting that not only can it make you a millionaire before PPF, but the original amount of investment also remains less.
(Note: Before investing in mutual funds, take the help of a financial advisor)
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