Both ELSS and PPF are great investments for section 80C deduction of income tax act. However, there are some basic differences one should be understood before taking an investing decision.
|
Factors |
ELSS |
PPF |
|
Investment |
ELSS is an equity mutual funds which invests primarily in shares or shares related investments |
PPF is an investment vehicle which is like fixed deposit for long term period (15 years). One can invest monthly, quarterly or lump sum etc. |
|
Returns |
The returns in ELSS is not fixed and is completely dependent on equitymarket’s performance. |
The returns obtained are fixed. The present rate of interest is 8.7% compounded annually. However, the rate of interest can change any time as per government policies. |
|
Risk |
There is no guarantee of principle safety in ELSS. However, equityinvestments generally give positive returns in long-term. As per our research, BSE SENSEX has delivered an annual return of 12.78% in past 10 years. |
It’s government sponsored scheme and it’s completely safe. |
|
Liquidity |
Amount Invested in ELSS can be withdrawn any time after 3 years. |
PPF have very low liquidity. One can withdraw certain amount after 7th year from PPF account, but overall it’s a scheme for long term investment only. |
|
Tenure |
The tenure ranges from three years till any time period as per the choice of investor |
The minimum tenure is 15 years which can be increased further in a block of 3 years. |
|
Lock in period |
There is lock-in period of 3 years. |
The lock-in period in PPF is 15 years. One can’t close PPF before the completion of full 15 years. |
|
Onlinetransaction |
ELSS can be done Online. An investor can invest or sell ELSS fund any time |
For PPF, some banks have started giving online facility. However, first-time investor has to visit the bank and do the initial registration by submitting documents. |
Further, we advise you to consult your advisor or check your risk profile before making any investing decision.