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If you are wondering where to invest - SIP or PPF - to generate a sizeable corpus, you are not alone. Many of us are confused about the various investment options. In this context, we will compare SIP and PPF to help you decide which one can generate a higher corpus with an investment of Rs 1,45,000 per year for 20 years. We will use calculations to illustrate our points.

Also Read: Power of Rs 1,50,000 PPF: How many years will it take to generate over Rs 90,000/month tax-free income from Public Provident Fund?

SIP is a process of investing a fixed amount in mutual funds. Individuals can invest daily, monthly, quarterly, or yearly in a mutual fund scheme.

Public Provident Fund is a government-backed retirement scheme that is eligible for tax deductions under Section 80C of the Income Tax Act. 

The minimum amount to invest in every mutual fund varies. Thus, there is no definite minimum investment amount, but some funds offer a minimum investment amount as small as Rs 100.

The minimum deposit in a year is Rs 500, whereas the maximum limit is Rs 1.5 lakh.

Currently Public Provident Fund is offering an interest rate of 7.1 per cent.

Since there are no fixed returns in SIP investment, we are calculating as per annualised returns of 8 per cent (debt fund), 10 per cent (equity fund), and 12 per cent (hybrid fund).

Yearly investment: Rs 1,45,000 (monthly investment Rs 12,083x 12 months)

Time period: 20 years

Rate of interest: 7.1 per cent 

On a Rs 1,45,000/year investment, the retirement corpus in 20 years will be Rs 64,36,345. The estimated total interest during that time will be Rs 35,36,345. 

Since there are no fixed returns in SIP investment, we are calculating as per annualised returns of 8 per cent (debt fund), 10 per cent (equity fund), and 12 per cent (hybrid fund). We're also assuming a monthly investment of Rs 12,083(1,45,000/12)

At 12 per cent annualised growth, the estimated corpus in 20 years will be Rs 1,11,14,636. During that time, the invested amount will be Rs 28,99,920, and estimated capital gains will be Rs 82,14,716.

At 10 per cent annualised growth, the estimated corpus in 20 years will be Rs 87,47,932. The estimated capital gains will be Rs 58,48,012.

At 8 per cent annualised growth, the estimated corpus in 20 years will be Rs 69,19,451. The estimated capital gains will be Rs 40,19,531. 

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