PPF vs Mutual Fund: You have to raise ₹ 27 lakh for retirement? Learn what is better for you

PPF vs Mutual Fund: To deposit sufficient funds for retirement is an important financial goal of all of us. It is very important to make a strong retirement funds to feel economically safe in old age. Indian investors usually consider investing in options such as Public Provident Fund (PPF) and Mutual Fund. But which of these two is the best option for you? Let’s understand.

Safe investment option: PPF
If you want to create your retirement fund with guaranteed returns without any risk, Public Provident Fund (PPF) can be a great option. This is a safe scheme supported by the government, in which you do not have to take any kind of risk. At present, PPF is getting 7.1% annual interest, which is compound, which increases your money rapidly.

How to make a fund of ₹ 27 lakh?
To make a retirement fund of ₹ 27 lakh through PPF, you have to invest ₹ 12,500 every month. If you invest this amount for 15 consecutive years, then according to the interest rate of 7.1%, you will get more than ₹ 27 lakh on maturity. In PPF, you can invest a minimum of ₹ 500 to a maximum of ₹ 1.5 lakh in a financial year.

Benefits of PPF:

• Guaranteed Return: Since it is supported by the government, it gets guaranteed returns on your investment, which does not affect the market fluctuations.

• Tax-free income: For PPF investment, “Exempt, ExamePt, Exame (EEE) category falls. This means that you get tax-free benefits on all three on all three received on the amount of invested (under Section 80C), earned interest and maturity.

  
  

• Partial withdrawal and loan: You can do partial withdrawal from PPF account under certain conditions or also take loans on it.

What is mutual funds?
In contrast, mutual funds are an investment option associated with the market. The return depends on the performance of the market, so it is more risky than PPF. However, if you are ready to take more risk, mutual funds can also give much more returns compared to PPF. Equity mutual funds for long-term investment (eg via SIP) have historically given a return of 10–12% or more.

Whom to choose?
Your choice depends on your risk -taking ability and financial goals.

• If you Low risk and guaranteed returns If you like, PPF is a safe and beneficial option for you.

• If you Willing to take more risk and expect high returns If you do, mutual funds can be part of your portfolio.

To create a good financial portfolio, you can bring diversity by investing in both PPF and mutual funds. This ensures that you have both safe and high growth investment.