PPF vs Mutual Fund: Where to invest for 15 years, make your child crorepati

When it comes to investing for your child, every parent has two aspects related to it- emotional and economical. It is very important to save for your child and make their future secure. There are various options available in the market where parents can invest money with a long term plan for their child. The two most convenient options are Public Provident Fund (PPF) and mutual funds. The investment in mutual funds can be through SIP or Systematic Investment Plan. However, there are certain pros and cons of both these financial schemes.

Public Provident Fund (PPF)
Public Provident Fund or PPF is a government savings scheme and has a fixed return and the interest rate of the same is fixed by the government. A PPF account can be opened with both post office and with banks. The current interest rate on PPF is 8 per cent. The interest earned through PPF is also tax-free.

According to tax expert, Balwant Jain, it is best to invest in PPF if you are doing it at the later stage of your career, as this is risk-free and there is no chance that you can lose your money. “If someone is investing for their child at a later stage in life or after retirement, the PPF is the best option for them, There is risk related to it, and you know that your money is safe,” said Balwant Jain.

(source:https://cleartax.in/s/ppf-calculator)

PPF has a lock-in period of 15 years and the tenure of a PPF account can be extended after 15 years in blocks of 5 years each. If one plans to invest Rs 10,000 per month in PPF for his/her child for 15 years at 8 per cent interest, the investor would get a return of Rs 35,18,914 after the tenure.

Systematic Investment Plan (SIP)
Mutual Fund is one of the most popular investment options these days. It pools money from many investors in the market to purchase securities. All mutual funds are registered with SEBI (Securities Exchange Board of India). Considering the returns in recent times, investing in mutual funds has become one of the easiest means to grow wealth. With the introduction of SIP or Systematic Investment Plan, which is a method of investing in mutual funds, tthings have become easier. Using SIP, an investor can invest a fixed amount every month in a mutual fund.

According to Balwant Jain, if someone starts investing early in life for his/her child keeping a long term goal in mind, SIP is the best option one can avail for. “There is no risk in investing in SIP for a long term and it gives you a lump some return. If 15 years is the investment tenure, then SIP is the best option for investment for your child,” said Jain.

(source: https://cleartax.in/s/mutual-fund-calculator)

If you are investing Rs 10,000 per month in SIP at 20 per cent interest, then you are likely to get 1,11,56,999 after 15 years.