When it comes to long-term investment options for building a substantial corpus, two popular choices often stand out: the Public Provident Fund (PPF) and Systematic Investment Plans (SIPs). Both offer unique benefits and cater to different risk appetites. Let's analyze how an annual investment of ₹1,25,000 in each of these options for a period of 10 years would fare, based on the latest available information.

Public Provident Fund (PPF)

PPF is a government-backed savings scheme, making it a safe and secure investment avenue. The interest rate is determined by the government and is subject to change on a quarterly basis. As of September 2025, the PPF interest rate is 7.1% per annum, compounded annually.

• Investment and Returns: If you invest ₹1,25,000 annually in PPF for 10 years, your total investment would amount to ₹12,50,000. At a fixed interest rate of 7.1%, the estimated maturity amount after 10 years would be approximately ₹18,20,192. The interest earned would be around ₹5,70,192.
• Tax Benefits: PPF enjoys an "Exempt, Exempt, Exempt" (EEE) status. This means that the contributions are eligible for tax deduction under Section 80C of the Income Tax Act (up to ₹1.5 lakh per annum), the interest earned is tax-free, and the maturity amount is also exempt from tax.
• Other Features: PPF has a maturity period of 15 years, which can be extended in blocks of 5 years. A loan facility is available against the PPF account between the 1st and 5th financial year from the date of opening the account.

Systematic Investment Plan (SIP)

SIP is an investment approach where you invest a fixed amount regularly in a mutual fund scheme. SIPs are market-linked investments, and returns depend on the performance of the chosen fund.

• Investment and Returns: With an annual investment of ₹1,25,000 in a SIP for 10 years, the total investment would be ₹12,50,000. SIP returns are not fixed and can vary significantly based on market conditions and the fund's performance. Assuming an average annual return of 12%, the estimated corpus generated after 10 years would be approximately ₹23,23,947. The capital gains would be around ₹10,73,947.
• Tax Implications: SIP investments in Equity Linked Savings Schemes (ELSS) qualify for tax deduction under Section 80C of the Income Tax Act. However, the returns from SIPs are subject to capital gains tax. If the units are sold after one year, long-term capital gains (LTCG) tax applies, while short-term capital gains (STCG) tax is applicable if sold before one year.
• Flexibility: SIPs offer flexibility as you can modify the investment amount or discontinue the SIP at any time.

PPF vs SIP: Which Delivers a Bigger Corpus?

Based on the calculations, with an annual investment of ₹1,25,000 for 10 years, SIP has the potential to deliver a significantly larger corpus compared to PPF. However, it's crucial to remember that SIP returns are market-linked and can fluctuate, while PPF offers guaranteed returns and tax benefits.

Considerations:

• Risk Appetite: If you prefer a safe and secure investment with guaranteed returns and tax benefits, PPF is an ideal choice. If you are comfortable with market-related risks and seek potentially higher returns, SIP may be more suitable.
• Investment Horizon: PPF has a longer maturity period of 15 years, while SIPs can be continued for any duration.
• Financial Goals: Align your investment choice with your financial goals. If you are saving for retirement or other long-term goals and prioritize safety, PPF is a good option. If you have shorter-term goals and are willing to take risks for higher returns, SIPs can be considered.

Disclaimer: The calculations mentioned above are based on current interest rates and assumed rates of return. Actual returns may vary depending on market conditions and changes in government regulations.