PPF vs ELSS

Compare PPF and ELSS (Tax Saving Mutual Funds) to find out the best suitable option for you.

PPF (Public Provident Fund) ELSS (Equity Linked Savings Scheme)
PPF is very safe, backed by Goverment of India. ELSS are diversified equity funds. So, it's volatile and risky by nature.
Return is also fixed @ 8.10% (Annual) You can expect 15% or higher returns (Annual)
Tax exemption : EEE Tax exemption : EEE
Lock in period : 15 years
(Although, partial withdrawls can be made after 5th year)
Lock in period : 3 years.
Maximum duration : 15 years There is no such limit.
One can deposit (upto 1.5L) a year in 1 to 12 installments No such limits, however, the section 80C limit(1.5 L) will be applicable for claiming deductions
Better suited for risk averse investor who wants an assured return of 8.7%. Better suited for young investor who can take risk and aim for a higher return (15% or more).

Note : If you go for ELSS, buy direct plan of the selected fund instead of the regular one. It generates higher returns due to lower expense ratio.

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