Investment Planning: If you are also preparing to invest for big funds, then this news is very useful for you. Today here we are telling you which one is better for you, Mutual Fund or PPF.Â
Investment Planning: Most of the people are confused about the choice of savings. If you will save smartly then you will soon become a millionaire. Now the question is, which investments can be made so that you can fulfill your life goals.
Risk or Return?
Investment is seen in two ways – one is risk and the other is return. But many people are afraid of risk so put their money in safe investments like PPF. In which the risk is less. But many people are capable of taking a little risk and invest in equity mutual funds. Where there is risk but returns are also high.
PPF Vs MUTUAL FUNDS
Here we will compare investments in PPF and equity mutual funds and try to understand which investment can be beneficial according to your goals. Suppose your goal is to become a millionaire by investing Rs 10,000 every month.
Millionaire through PPF
The return of 7.1% is being given on PPF for October-December 2020. The government decides the return of PPF every quarter. At one point of time, 12 percent return was also available on PPF, and it has also come down to 4 percent. Well let’s assume that the average return on PPF is close to 7.5%. If you are 30 years old, you started investing Rs 10,000 every month in PPF from today itself. Average rate of return is 8%. It will take you 27 years to become a crorepati from PPF.
Millionaire through PPF
- Investment per month 10,0000
- Estimated Rate of Return 7.5%
- Total Investment Amount 32.40 Lakh
- Estimated Return 72.70 Lakh
- Net Value 1.05 Crore
- Duration 27 Years
Millionaires Through Equity Mutual Funds
Now if you invest the same amount of Rs 10,000 every month in equity mutual funds, then see what happens. Equity mutual funds give an average return of 10-12 per cent over a long period of time. Mutual Funds offer higher returns on investment than PPF. In such a situation, if you invest every month, you will become a millionaire in 20-21 years. That is, at least 6-7 years before mutual funds, you will have an amount of one crore in your hands.
Crorepati Investing Monthly Through Mutual Funds
10,0000
Expected Return Rate 12%
Total Investment Amount 25.20 Lakh
Estimated Return 88.66 Lakh
Net Value 1.13 Crore
Duration 21 Years
Note that the amount invested in PPF is also more and it took more time to become a millionaire, while investment in mutual funds also had to be reduced and the time taken to become a millionaire was also less, because the returns were higher. That is, investing in mutual funds can prove to be better for you.
Difference between PPF and Mutual Fund
A-
Risk in PPF Mutual Fund is negligible
in Equity Mutual Fund there is a risk in the short term
B-
Lock in period of 15 years in PPF
Equity mutual funds like ELSS lock in period of only 3 years
C-
By investing in PPF, you can withdraw some money only after 7 years with certain conditions, money
can be withdrawn anytime in mutual funds
D-
Investing in PPF for 15 years gets a deduction of 1.5 lakh under 80C,
investing in ELSS for 3 years gets a deduction of 1.5 lakh under 80C
Taxes in PPF and Equity Mutual Funds
PPF comes under the EEE category, that is, there is no tax on investment, return and maturity amount, whereas in equity mutual funds, if the profit is more than 1 lakh in a financial year, then 10 percent long term capital gains tax on it. Seems like.
