SIP vs ppf
- 2. SYSEMATIC INVESTMENT PLANS SIPs are like drops of water, the more collected, the larger the pool it creates. SIPs are a disciplined way of investing in funds. The more disciplined you are, the better it works out for you. The POWER OF COMPOUNDING works best for people investing through SIPs.
- 3. UNDERSTANDING PPF The interest rate on a PPF account for this year 2015- 2016, is 8.7% You can open an account with Rs. 100/-, but minimum investment is Rs. 500/- and maximum is Rs. 150000/-. A joint account cannot be opened. Only one account per person can be opened. The maturity period is 15 years, but partial withdrawal is allowed under certain conditions.
- 4. SIP Vs PPF SIPs are more beneficial and have less restrictions, as compared to a PPF. PPFs may or may not continue in the future, but markets can’t shut down for good. SIPs can be used to fund long and short term goals, through debt and equity funds. PPFs can fund goals occurring after it’s maturity. Although partial withdrawal is allowed, but under certain conditions.
- 5. THIS TABLE WILL HELP YOU DECIDE PARTICULARS SYSTEMATIC INVESTMENT PLAN (SIP) PUBLIC PROVIDENT FUND (PPF) RATE It fluctuates, an average of 11% can be considered. 8.7% LIQUIDITY Easy liquidity It has a 15 year lock in. After maturity, it can be extended in blocks of 5 years. RISK Very Risky Less Risk Withdrawal Can be withdrawn any time Partial withdrawal is allowed in the 7 year, under certain conditions. Tax benefits Lock in for 3 years, after which it is tax free. Investment, income earned and maturity amount is tax free.
- 6. WORKING OF SIPs SIP POWER OF COMPOUNDING FUND YOUR FINANCIAL GOALS
- 7. POWER OF COMPOUNDING Power of Compounding works on lump sum amounts as well as SIPs. It is more effective when investments are done through SIPs, as you get interest on interest. Another important factor to keep in mind is that, you need to start investing early, for the compounding to work it’s magic.
- 8. CONCLUSION I would like to conclude by saying that, SIPs and PPF are both good options for investment. But SIPs can help you reach your goal faster than PPFs. Investing through SIPs are more flexible than investing in PPFs, as we have already seen earlier. So now, you know what you want, so invest wisely!