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 (e.g Franklin India Tax Shield). So, it's volatile and risky by nature. |
| Return is also fixed @ 7.10% (Annual) | You can expect 11% 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%. | Better suited for young investor who can take risk and aim for a higher return (12% 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. Also check out these Top 10 Mutual Funds in India if you want to invest in equities.