Mumbai: If you invest ₹1.5 lakh every year for 25 years, the humble Public Provident Fund (PPF) will grow your money to around ₹1.04 crore at the current 7.1% interest rate. But the same amount systematically pumped into equity mutual funds through SIP can swell to a staggering ₹3.27 crore – over three times more – assuming a conservative 12% average return.
Financial planners assert that compounding and the power of equities are the key factors. While PPF provides guaranteed, tax-free returns and zero risk, equity SIPs benefit from India’s economic growth. Historical data shows large-cap and flexi-cap funds have delivered 12–15% annualised returns over the past two decades.
“PPF is ideal for risk-averse investors needing certainty for goals like children’s education or retirement,” says certified planner Priya Malani. “But if you have a horizon beyond 15 years and can stomach volatility, equity SIPs create generational wealth.”
A ₹12,500 monthly SIP at 12% compounds to ₹3.27 crore; at 15% it crosses ₹5.5 crore. Even after the 28% long-term capital gains tax (post-indexation removed), the final take-home remains far higher than PPF’s tax-free ₹1.04 crore.
Experts recommend a balanced approach: keep 40-50% in PPF for safety and liquidity, and channel the rest into diversified equity funds. The choice ultimately boils down to your risk appetite – peace of mind or the thrill of building serious wealth.