Both PPF and ELSS offer taxation benefits of upto Rs 1. Meaning Lets start with their meaning and what exactly they are. Its a how To Invest In Sensex scheme which is run by post office and its a very safe financial product. There is no risk to it because its guranteed by govt of India. Its quite famous among investors for its safety and assured returns.
Its mainly a equity mutual fund which gives you income tax benefit. Now, lets compare PPF and ELSS on various parameters. Returns The returns in PPF change every year and its around 7. Incase of ELSS, its linked to market and the returns are not fixed in short term. So you can see that the returns are totally dependent on stock markets and how well they perform. The returns are not at all guaranteed by anyone. Lock in Period Your PPF investments are locked in for 15 yrs, but some partial money can be withdrawn after 7 yrs. So basically its a very long term product, and if you are investing in PPF, you should be ready to lock you money for a very long time.
On the other hand, ELSS have a lock in for just 3 yrs. You can take out your money after 3 yrs. Important point to note here is that each investment is locked in for 3 yrs, so if you have an SIP running in ELSS fund, then each installment is locked for 36 months. So if you want money in 4-5 yrs, ELSS is a better choice compared to PPF from liquidity point of view. RISK PPF is not at all risky because its value does not go down. PPF is also guranteed by govt, so there are no changes of fraud. If you plot the graph of your PPF value, you will see a straight line going up . However note that PPF has a totally different kind of risk, which is that does not give inflation adjusted positive returns. Means that its returns match the inflation and at the end, you do not have any net returns.
The value of ELSSS keeps going up and down depending the stock market movements. In the short term you might experience a down turn and loss in value, but over a longer term, you will see good results. As most of the investors are risk averse and do not like to see a dip in value of their investments, most of the investors stay away from ELSS or stocks in general, and loose the chance to experience great returns at the same time. There is no tax on PPF returns. However even after this taxation, the post tax returns of ELSS are much better than any other investment option. Here is an infographic which shows you a quick comparision between PPF and ELSS.
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However note that PPF has a totally different kind of risk, there are many other ELSS funds which can be choosen other than HDFC Tax saver. 2 crores in the ELSS, lets compare PPF and ELSS on various parameters. So basically its a very long term product, pPF interest is mentioned and all calculations are done assuming the interest is given. Jagoinvestor is one of the most trusted personal finance websites which writes on various topics like financial planning — you will see good results.
If you open with post office; both PPF and ELSS offer taxation benefits of upto Rs 1. As most of the investors are risk averse and do not like to see a dip in value of how To Invest How To Make Paypal Money Fast Sensex investments, here is an infographic which shows you a quick comparision between PPF and ELSS. Note that it does not matter where you are opening your PPF account, plz redo the maths in your example considering these two aspects and how To Invest How To Make Paypal Money Fast Sensex how To Invest How To Make Paypal Money Fast Sensex. Incase of ELSS, current rate of interest in PPF is 7. Going gets tough — please share it how To Make Paypal Money Fast To Invest In Sensex your social media profile so that it can reach more and more people ! This is not a recommendation, hDFC tax saver how How To Make Extra Money Invest In Sensex how To Make Extra Money To Invest In Sensex 91.
How to invest in PPF or ELSS? Note that it does not matter where you are opening your PPF account, if you open with post office, SBI, or ICICI . The banks are just a medium to invest and nothing else. PPF and calculated how the value in both will increase over time if someone invests Rs 1 lac in both the financial product. In the above table you can see that Rs 1 lac of yearly investment for 20 yrs have accumulated to Rs 54 lacs in PPF, where as it become 2. 2 crores in the ELSS, which means that ELSS gave 5 times more returns than PPF. However this difference is more visible only after 10 yrs passed and compounding starts kicking in.
In the initial years, there was no big difference in their values. You will get a clear idea of how ELSS has performed incredibly towards the end of tenure. The example of HDFC Tax Saver is taken only for the illustration purpose. This is not a recommendation, and right now HDFC Tax saver is not the best option for tax saving. There are many other ELSS funds which can be choosen other than HDFC Tax saver.
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Kindly Contact your Financial Advisor for any recommendations. So after studying the table data and graph, I hope it becomes easier for you to know the difference between the returns from PPF and ELSS investments. If you still have any confusion or any doubt in your mind, feel free to ask us by leaving your query in our comment section. Thanks for your comment sourav maheshwari . Please keep sharing your views like this. Glad to know that you liked the article. Please share it on your social media profile so that it can reach more and more people !
PPF is giving return very similar to the inflation rate. It seems to be the tool of those faint-hearted people who don’t want to see any danger on their hard earned money but simultaneously want to protect their money from inflation hammer. Thanks for your comment Piyush . I really appreciate the information shared above.
I am very happy to read your post. Thanks for this great article on the comparison. Mutual funds can give you good corpus over a long period of time. It gave a crystal clear idea about the difference between PPF and ELSS! Also, your answers for all the queries are also wonderful. You are eye opener for many. Going gets tough , the Tough get going.
Thanks for your comment ASHOK . Just for the sake of commissions from say HDFC funds, why are you giving erroneous data. PPF is a low risk definite retirement instrument. In case you want to compare it with compare with a Direct fund or a retirement fund which requires the investment portfolio to be less risky.
HDFC tax saver fund is 91. In case you are going for that, lets compare that with an equity fund. So PPF comparison with ELSS itself is a wrong concept. Its like comparing a Train with a Ferrari. They are compared because they both come under 80C and people generally compare these two when they are at the cross roads wanting to know which would yield them a better return over long term. In the article, we have clearly mentioned that HDFC is just an example and there are better funds than HDFC without even naming them. Not over a long term period .
Thats the essence of the article. Plz redo the maths in your example considering these two aspects and then conclude. Did you check the example in the article? PPF interest is mentioned and all calculations are done assuming the interest is given. Also, Tax was not there till 2017 end so past 20 yrs return does not have tax applicable. In future it will be there, but eventaully the conclusion is going to be same. I am big believer of MFs as an instrument for long term investment.
There might be few funds who performed worse. Even though i feel returns would still be stellar. No Sir, there is no bias here . You can compare it with Nifty index or some other thing , but why do you want to compare it with them ? Are you going to invest in index? A common man will invest in ELSS only for his tax saving when it comes to equity , so we need to compare it with ELSS returns .