SIP vs PPF: Expert Explains Which Investment Can Build More Wealth in 10 Years

When it comes to safe and long-term investments, Indians often choose between the Public Provident Fund (PPF) and mutual fund Systematic Investment Plans (SIPs). While PPF offers guaranteed returns, SIPs provide higher growth potential—but with some risk.

Currently, PPF offers 7.1% annual interest, compounded yearly, with a lock-in of 15 years and a maximum annual investment of Rs 1.5 lakh. Returns are completely tax-free. In contrast, SIPs are market-linked, especially in equity funds, and can deliver far higher returns over time despite market volatility.

Expert View

Gajendra Kothari, MD & CEO of Etica Wealth, highlighted the difference in a recent podcast.

“PPF is safe and guaranteed, but SIPs have helped me create much more wealth. In the last decade, even with events like the COVID-19 crash, my SIPs delivered nearly 18% annual returns. That’s the real power of compounding,” he said.

He illustrated this with an example:

• A Rs 5,000 SIP started in 2010 in a small-cap fund has grown nearly 11–12 times.
• The first Rs 5,000 installment is now worth around Rs 60,000.
• If continued for another 15 years, one such installment could reach Rs 7.2 lakh.

Kothari stressed that automation makes SIPs even more effective.

“You don’t need to time the market. Automated investing removes emotions and ensures discipline, which is the real secret to wealth creation,” he noted.

Advice for Young Investors

According to Kothari, financial planning for beginners should start with protection and discipline:

• Buy term and health insurance first.
• Keep some savings in liquid funds for emergencies.
• Channel the rest into SIPs for long-term growth.
• Always diversify across funds to balance risk.

He added that his personal portfolio is fully in mutual funds—avoiding FDs, PPF, crypto, and direct stocks—because of the superior wealth-building potential.

Conclusion

While PPF remains a safe and tax-free option, SIPs have the potential to deliver significantly higher returns if investors stay committed for the long term.

As Kothari summed up:

“SIPs are one of the best financial tools of our century. Start early, automate your investments, diversify, and focus on long-term goals.”