PPF vs ELSS - Which Suits Your Portfolio

Nutan Gupta

14 Oct 2016

PPF vs ELSS

Public Provident Fund (PPF) and Equity Linked Saving Scheme (ELSS) are both tax-saving instruments which are eligible for tax exemption up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. However, a lot of people are sometimes in a dilemma about which instrument to invest in. The below table will explain you how PPF is different from ELSS.

Features PPF ELSS
Investment It is a type of investment which is provided by the Government of India ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products
Lock-in Period 15 years 3 years
Returns The rate of returns changes as per government policies.

Current returns - 8.1% compounded annually
Not fixed, depend upon the performance of equity market
Risk Factor Completely risk-free ELSS carries some risk. However, research suggests that ELSS has given positive returns over a longer period of time.
Liquidity Liquidity is low. One can withdraw only a certain amount after 7 years. Also, one cannot withdraw amount frequently after 7 years. One can withdraw money from ELSS any time after 3 years.
Tenure The minimum tenure is 15 years. If someone wishes to increase the tenure, he can do that in a block of 3 years. The tenure ranges from three years to the time an investor chooses to redeem his investment. There is not a fixed tenure in ELSS.

ELSS has a potential to generate higher returns over a longer period of time. Moreover, it generates a habit of saving among young investors.

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PPF vs ELSS - Which Suits Your Portfolio

by User Not Found | Oct 14, 2016
PPF vs ELSS

Public Provident Fund (PPF) and Equity Linked Saving Scheme (ELSS) are both tax-saving instruments which are eligible for tax exemption up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. However, a lot of people are sometimes in a dilemma about which instrument to invest in. The below table will explain you how PPF is different from ELSS.

Features PPF ELSS
Investment It is a type of investment which is provided by the Government of India ELSS is a type of mutual fund scheme where most of the fund corpus is invested in equities or equity-related products
Lock-in Period 15 years 3 years
Returns The rate of returns changes as per government policies.

Current returns - 8.1% compounded annually
Not fixed, depend upon the performance of equity market
Risk Factor Completely risk-free ELSS carries some risk. However, research suggests that ELSS has given positive returns over a longer period of time.
Liquidity Liquidity is low. One can withdraw only a certain amount after 7 years. Also, one cannot withdraw amount frequently after 7 years. One can withdraw money from ELSS any time after 3 years.
Tenure The minimum tenure is 15 years. If someone wishes to increase the tenure, he can do that in a block of 3 years. The tenure ranges from three years to the time an investor chooses to redeem his investment. There is not a fixed tenure in ELSS.

ELSS has a potential to generate higher returns over a longer period of time. Moreover, it generates a habit of saving among young investors.

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