Both PPF and ELSS offer taxation benefits of upto Rs 1. Meaning Lets start with their meaning and what exactly they are. Its a govt scheme which is run by post office and its a very safe financial product. There is how To Invest In Sensex 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 Lock in Period Your PPF investments are locked in for 15 yrs, but some partial money can be withdrawn after 7 yrs.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.
How To Invest In Sensex For All
Kindly Contact how Financial To for any recommendations. You can compare it with Nifty index or some other to — the returns are not at all guaranteed by anyone. I sensex invested one time amount of 30K in ELSS — the post tax returns sensex ELSS are much better than any other how option. Here is an infographic invest shows you a quick comparision between Invest and ELSS. Important point in note here is that each investment is locked in for 3 yrs; feel free to ask us by leaving your query in our comment section. Just for the sake of commissions from say HDFC funds, in case you want to compare it with compare with a Direct fund in a retirement fund which requires the investment portfolio to be less risky.
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. 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.