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Invest in Public Provident Fund i.e. PPF for 15 years or invest in index funds for long term. People want to earn more by investing money. On the other hand, there are some people who want to earn without paying tax to the government. PPF is recognized for its tax exemption on profits. On the other hand, after investing in index funds, people want to avoid paying taxes to the government. In such a situation, the question arises that which of these two can be a more profitable deal. Let us try to understand it in terms of interest rate.
What are EEE Benefits on PPF and Index Funds
After investing in PPF, people only expect better returns from it. Not only this, it is based on EEE benefits. Simply put, here E means Exempt. After investing in it for 15 years, no money has to be paid as tax while withdrawing it. It is very easy to come out of it anytime. On the other hand, after investing in index benefits, after its maturity, it is necessary to pay money to the government in the form of tax on the benefits.
Benefits of investing in PPF for 15 years
If you look at the past records before investing in PPF for 15 years, the interest rates have remained between a maximum of 8.8% and a minimum of 7.1%. If we estimate for the coming 15 years, then it is likely to reach around 12%. The interest rate is decided by the government after every 3 months. Talking about October to December last year, the interest rate on PPF was fixed at 7.10%. On the other hand, if we talk about the next 10 and 15 years, then 8% average rate can be estimated.
Benefits of Investing in Index Funds for 15 Years
Taking Nifty Fifty index as base, index funds have given around 9.13% returns in the last 15 years. On the other hand, if we talk about the next 10 to 15 years, then it is expected to go up to about 13% or more. According to the average estimate, if invested in it for the next 10 or more years, then you will be able to get a return of about 10-13%. After paying 10% tax on this, it can be reduced to about Rs 1 lakh. That is, it is now clear that you will be able to get interest up to 8% in PPF and up to 10% in index funds. Index funds can be a better deal than interest rate funds.
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