PPF or ELSS

PPF - Public Provident Fund.

PPF allows you to invest for 15 years and cannot be withdrawn. It can be extended for every 5 years there after. The rate of interest at present is 7.1% per annum. Though it is useful to save tax under section 80C, it can only beat inflation. Wealth Generation is not possible through PPF. . Minimum 1 instalment of Rs.500 should be deposited per annum. Maximum limit to invest is Rs.1,50,000 per annum. After 7 years, we can withdraw our investments but a charge is levied on our withdrawal amount.

By investing through SIP in ELSS (Equity Linked Savings Scheme), we can generate wealth exponentially over a period of time. The lock in period is just 3 years as compared to 15 years in PPF. After three years we can with draw the amount without any charges. SIP can be paused any time if required, till we decide to continue again. That will not cause any issue to the invested amount. There is no upper limit for our investments. Though there is a risk of market volatility in short term, there is a potential growth in the long term.

Comments

Post a Comment

Popular posts from this blog

Large Cap - Mid Cap - Small Cap

Image
Below is the chart that shows how ₹1000 in each of these funds grew over a period of 20 years from 2003 to 2023. From the chart it was noticed that Small cap and Mid cap returns are more than Large cap. During corrections, large cap will correct upto 20%. Midcaps can fall from 30–40% and Small cap may lose the value from 40–60%. If we invest only in Small Caps by looking at past performance, we may get panic and try to withdraw the entire portfolio during corrections. Investment in large cap alone will not give desired returns. It is also advised to invest some portion in Debt funds also. This will help in generating emergency fund so that we can withdraw if required with out disturbing the equity part. So invest 40% in Large cap, 30% in Midcaps, 20% in small cap and 10% in debt funds for better returns.  
Read more

Monthly Income from Mutual funds (SWP)

Image
We can park the corpus in Debt Mutual Funds or in Liquid Mutual Funds and systematically withdraw at regular intervals. This process is known as Systamatic Withdrawal Plan (SWP). This is useful for a person who is retired and need money for his daily needs.  He can fix a day to withdraw a portion of the corpus.  Every month the said amount will be credited to his bank account on that particular day. In the past, debt mutual Funds gave a return of 8% to 10% where as Liquid mutual Funds gave a return of 5% to 6%.
Read more

Which is better - SIP or Lumpsum?

Image
 SIP is Systamatic Investment Plan. We can start SIP with as low as Rs.500 every month. For small investors who want to invest in stock market can go through SIP.  When markets fall, we will get more units and when markets raise, our investments grow faster. On the other hand, Lumpsum amount is invested only once. Even when market falls, we may not have sufficient funds to add. More over, many people can’t afford to pay Lumpsum at a time. So investing in Mutual funds via SIP mode is easy.
Read more