PPF Vs Mutual Fund Calculator

Mutual Fund Maturity Formula:

\[ M = P \times \left(\frac{(1 + r)^n - 1}{r}\right) \times (1 + r) \]

Mutual Fund Maturity ($):

PPF Maturity ($):

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1. What is a PPF vs Mutual Fund Calculator?

Definition: This calculator compares the maturity amounts of Public Provident Fund (PPF) and Mutual Fund SIP investments over time.

Purpose: It helps investors understand the potential returns from these two popular investment options.

2. How Does the Calculator Work?

The calculator uses these formulas:

Mutual Fund: \[ M = P \times \left(\frac{(1 + r)^n - 1}{r}\right) \times (1 + r) \] PPF: \[ M = P \times \frac{(1 + r)^n - 1}{r} \]

Where:

$ M $ — Maturity amount ($)
$ P $ — Annual investment ($)
$ r $ — Expected rate of return (decimal)
$ n $ — Investment period (years)

Explanation: The mutual fund formula accounts for SIP investments at the beginning of each period, while PPF assumes annual contributions.

3. Importance of Investment Comparison

Details: Comparing these options helps investors make informed decisions based on risk tolerance, return expectations, and investment horizon.

4. Using the Calculator

Tips: Enter your annual investment amount, expected rate of return (default 7% or 0.07), and investment period in years (default 10). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between PPF and Mutual Funds?
A: PPF is a government-backed fixed return scheme, while mutual funds are market-linked investments with variable returns.

Q2: What's a reasonable expected rate for mutual funds?
A: Equity mutual funds historically return 10-12% long-term, but conservative estimates use 7-8%.

Q3: Why does the mutual fund formula have an extra (1 + r) term?
A: This accounts for investments made at the beginning of each period (SIP), giving them slightly more time to grow.

Q4: Is PPF return guaranteed?
A: Yes, PPF returns are set by the government and guaranteed, unlike mutual funds which are market-linked.

Q5: Which is better for long-term investing?
A: Mutual funds typically outperform PPF over long periods (10+ years) but carry higher risk. PPF is safer but with lower returns.