SIP vs RD vs PPF: What ₹10,000 a Month Becomes in 20 Years

Each option receives ₹10,000 a month. The SIP is shown at an assumed 12% (an optimistic long-term equity figure) and at 8% (a cautious one). The recurring deposit assumes 7% compounded quarterly, a typical bank rate. PPF uses the current 7.1% rate, with ₹1.2 lakh deposited each year before 5 April. Taxes are ignored for now.

The gap between the 12% SIP and the rate-based options is large — but so is the uncertainty. The 8% SIP lands in the same neighbourhood as PPF, and an equity SIP can do worse than a deposit over any particular period.

PPF is government-backed and its rate is set by the Government each quarter (7.1% for October–December 2026); the calculation assumes it stays constant, which may not hold over 20 years. RD rates are fixed at opening for the deposit’s term, but over 20 years you would reinvest at whatever rates prevail. SIP returns depend on markets: they can be strongly positive over long periods and negative over short ones. A 12% line is an assumption; do not treat it as a promise.

• PPF: interest and maturity are tax-free, but the account has a 15-year lock-in with limited partial withdrawals, and deposits are capped at ₹1.5 lakh a year.
• RD/FD: interest is taxable at your slab rate each year, which lowers the real return — especially for higher-bracket taxpayers.
• Mutual fund SIP: gains are taxable under rules that depend on fund type and holding period; you can usually redeem at any time (subject to exit loads), which makes SIPs more flexible but exposes you to the market on the day you sell.

Money you need within three to five years — a wedding, a down payment — belongs in low-risk deposits, because a market fall just before you need it cannot be repaired. Goals ten or more years away can consider equity exposure, accepting volatility for a higher expected return. PPF suits long-term, tax-efficient saving you will not touch. Many people sensibly use more than one. Work backwards from a target with the SIP goal calculator, or compare deposits with the RD and PPF calculators.

Start early, invest regularly and be realistic. A 1% difference in return compounds into lakhs over 20 years, which is why assumptions deserve scepticism. Keep an emergency fund before investing, read scheme documents, and consider an adviser registered with SEBI for personal advice. This article is educational, not investment advice.