Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
Most people generally go for options that have high returns potential and minimum risk. Mutual funds and PPF are two of the popular long-term investment options among a range of plans. Let’s have a look at what Mutual Funds and PPF are and what’s better than the other.
What is the Public Provident Fund (PPF)?
Public Provident Fund (PPF) is a government-backed savings scheme for long-term investors, providing a secure avenue to build a financial corpus over time. It provides assured returns because it is not subject to market fluctuations. The PPF account comes with a fixed tenure of 15 years, extendable in blocks of five years. Under PPF, an investor can make a minimum contribution of Rs 500 and a maximum of Rs 1.5 lakh annually.
What are mutual funds (MFs)?
Mutual funds are investment vehicles that collect money from many individuals to buy a diverse portfolio of stocks, bonds and other securities. These funds are managed by experienced fund managers with the goal of achieving specific investment objectives. It invests in several financial instruments where the value is determined by its Net Asset Value (NAV).
Which is a better investment scheme?
PPF and mutual funds are two distinct investment plans and are considered tax-saving vehicles. Choosing between the two depends on the risk appetite and financial goals of the investors. Mutual funds provide an opportunity for higher returns, while PPF
offers stable and fixed returns.
Investment limits: When it comes to minimum investments, both PPF and mutual funds are convenient options. The maximum limit under PPF is Rs 1.50 lakh every year; mutual funds have no upper limit.
Liquidity: PPF lacks liquidity and comes with a 15-year lock-in period. Mutual funds, barring ELSS, offer high liquidity where you can exit after a day of investment.
Nature of investment: PPF is a government-backed savings scheme, while mutual funds are professionally managed portfolios of securities.
Flexibility in contributions: Mutual funds allow flexibility in the amount and frequency of contributions. In contrast, PPF requires a fixed annual contribution within a prescribed limit.
Interest rate determination: In PPF, it is set by the government and remains fixed for a specific financial year while mutual funds are influenced by market dynamics.
Purpose and goal alignment: Mutual funds are suitable for market-linked return seekers, while PPF is best for conservative investors looking for stable returns.
Both options have their benefits, where the decision to select depends on what an investor is looking for. If you want a secure investment with guaranteed returns and tax benefits, PPF is the way to go.
If you are willing to take on investment risk for higher returns and have long-term goals, you can look out for different types of Mutual Funds available in the market.