Sip Calculator
PPF and SIP — two of India's most beloved investment options. One guarantees returns and gives tax-free maturity. The other is market-linked but has historically crushed every fixed-income instrument. So which one should you pick? Let's settle this with data, math, and a live calculator.
SIP vs PPF — Feature Comparison Table
| Feature | SIP (Equity MF) | PPF |
|---|---|---|
| Returns | 10–15% CAGR (historical) | 7.1% (govt. set) |
| Guaranteed? | No (market-linked) | Yes (sovereign guarantee) |
| Tax on Gains | 12.5% LTCG above ₹1.25L | Fully tax-free (EEE) |
| Section 80C Benefit | Only ELSS SIP | Yes (up to ₹1.5L/yr) |
| Lock-in Period | None (ELSS: 3 yr) | 15 years |
| Liquidity | High (T+2 redemption) | Low (partial after 7 yr) |
| Risk Level | Moderate–High | Zero (govt. backed) |
| Inflation Beating? | Yes (historically) | Barely (post-inflation ~1-2%) |
| Best For | Long-term wealth creation | Risk-free savings + tax saving |
₹10,000/Month for 20 Years — Real Numbers
| Investment | Total Invested | Corpus | Tax Paid | Post-Tax Corpus |
|---|---|---|---|---|
| SIP (12% CAGR) | ₹24 L | ₹99.9 L | ₹9.5 L (12.5% LTCG) | ₹90.4 L |
| PPF (7.1%) | ₹24 L | ₹52.4 L | ₹0 (EEE) | ₹52.4 L |
Result: Even after paying 12.5% LTCG tax, equity SIP at 12% CAGR gives you ₹38 lakhs MORE than PPF over 20 years. The compounding power of equity is unmatched.
When PPF Wins Over SIP
- Zero risk tolerance: If you cannot handle any market volatility, PPF is your safest bet
- Tax-free returns: PPF's EEE status means absolutely no tax at any stage
- Guaranteed returns: You know exactly what you'll get — no surprises
- Loan facility: You can borrow against PPF balance from Year 3
- Senior citizens: For retirees who need capital protection
When SIP Wins Over PPF
- Long-term wealth creation (10+ years): Equity has beaten every fixed-income instrument historically
- Beating inflation: PPF barely beats inflation; SIP creates real wealth
- Liquidity: No lock-in (except ELSS), redeem anytime in 2-3 days
- Flexibility: Change amount, pause, stop — no restrictions
- Higher compounding: Even 3-4% extra CAGR makes a massive difference over 20 years
SIP vs PPF Calculator ↓
🏦 SIP vs PPF Growth Comparison
SIP (12% CAGR)
-
Post-tax: -
PPF (7.1%)
-
Tax-free: -
SIP gives you - more (post-tax)
Estimates based on historical averages. SIP Calculator →
The Ideal Strategy: SIP + PPF Together
Smart investors don't choose one — they use both. Here's the recommended split based on age:
| Age Group | Equity SIP % | PPF % | Rationale |
|---|---|---|---|
| 20–30 years | 80% | 20% | Maximum compounding runway |
| 30–40 years | 70% | 30% | Balanced growth + safety |
| 40–50 years | 50% | 50% | De-risk as retirement nears |
| 50+ years | 30% | 70% | Capital preservation priority |
Try Our Free SIP Calculator ↓
Model different SIP scenarios with our advanced calculator. Compare returns at various CAGR rates and investment periods.
Open SIP Calculator →Frequently Asked Questions
Is SIP better than PPF for wealth creation?
For long-term wealth creation (15+ years), equity SIP historically outperforms PPF significantly. SIP in equity mutual funds has delivered 12-15% CAGR historically, while PPF gives 7.1% guaranteed. However, PPF is risk-free and tax-exempt under EEE status.
Is PPF tax-free while SIP is taxed?
Yes, PPF enjoys EEE (Exempt-Exempt-Exempt) status — contributions, interest, and maturity are all tax-free. SIP gains are taxed: equity LTCG above ₹1.25 lakh is taxed at 12.5%, and STCG at 20%. Despite this, SIP's higher returns often compensate for the tax.
Can I invest in both SIP and PPF?
Yes, and this is actually the ideal strategy. Use PPF for risk-free, tax-free guaranteed returns (debt allocation), and SIP for equity exposure and wealth multiplication. This gives you the best of both worlds.
What is the lock-in period for PPF vs SIP?
PPF has a 15-year lock-in (partial withdrawal allowed after 7 years). SIP in open-ended equity funds has no lock-in (except ELSS which has 3-year lock-in per installment). SIP offers far better liquidity.
