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How does a Public Provident Fund for 15 years compare with a tax-saving mutual fund?
-Anonymous
Investments in PPF as well as Equity Linked Saving Schemes (ELSS) gives you tax deduction benefits. But the difference between the two is that equity tends to be the best performing asset class over a long period of time. Compared to that, if you look at PPF, it is giving you a very handsome return today, but that becomes very disappointing in relation to inflation. Any investment of this kind should be expected to beat inflation; it should be able to beat the fixed income return available. Equity can be a risky investment if you're investing for a short period of time, but with time on your side, equity is extremely rewarding.
This article was originally published on February 07, 2012.
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