PPF vs mutual fund: Which is better?

In a humble Indian household, when a young earner seeks guidance on where to invest, the elders often introduce them to the Public Provident Fund (PPF). You can't fault them either. Between 1985 and 2000, PPF was dishing out returns as high as 12 per cent annually. Due to such high returns and the sovereign's backing, PPF became the go-to investment option. As such, many have embraced PPF. According to the Reserve Bank of India (RBI), PPF had an eye-popping Rs 9.4 lakh crore of investor money as of March 2023. But does PPF stand the test of time? Or has it become a relic of the past? One of our subscribers recently asked this question. Given the rise of the mutual fund industry in recent years, he wondered how their returns stack up against PPF. The subscriber's valid question piqued our interest, so we looked across the whole array of mutual fund categories and identified the funds (growth plans) that have completed three decades. Here's what we found: PPF Vs Mutual Funds Assuming Rs 1,000 invested every month over the last 30 years. (Total amount invested is Rs 3.6 lakh) Current portfolio value Annualised return % (XIRR) Public Provident Fund (PPF) 16 lakh 8.6 Franklin India Prima Fund 1.9 crore 20.9 Aditya Birla Sun Life MNC Fund 1.3 crore

This article was originally published on June 17, 2024.