I am 40 years old and wish to invest Rs 2,000 every month. I am confused whether I should put this money into PPF or start an SIP in mutual fund.
The difference between PPF and mutual fund is that PPF guarantees returns, something mutual funds do not & cannot
I am 40 years old and wish to invest Rs 2,000 every month. I am confused whether I should put this money into PPF or start an SIP in mutual fund.
Suman Dutta, Kolkata
You come across as a first time investor, who is risk averse to boot. The fundamental difference between the PPF and mutual fund is that the PPF guarantees returns, something mutual funds do not and cannot. Moreover, PPF is considered to save taxes unlike investing in mutual fund, unless it is an equity linked savings scheme (ELSS). ELSS are a type of diversified equity mutual funds in which investments qualify for tax deduction under Section 80C of the income tax, up to Rs 1.5 lakh in a financial year. If you are looking for a substitute tax saver to the PPF, the ELSS is a good option. The ELSS has a 3-year lock-in compared to the 15 year lock-in of the PPF. Moreover, considering the continuous fall in the PPF guaranteed returns, you will be better off to consider investing in ELSS at your age.