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PPF or FD, in which you will get more money on investing for 15 years, know here

Siddhi Jain March 22, 2025 11:15 PM

If you want to invest in PPF and FD for 15 years, then which one can give more returns, let us know in this article.

If you want to invest in PPF (Public Provident Fund) and FD (Fixed Deposit) for a period of 15 years and you are not able to understand which one to invest in, then here we will explain to you which one will give more returns in the long run.

PPF

Interest rate: Currently 7.1% per annum (the government can change every quarter, but we consider it stable).

Investment: Rs 1.5 lakh annually (maximum limit).

Period: 15 years.

Investment amount after 15 years if you invest Rs 1.5 lakh every year in PPF: 1.5 lakh × 15 = Rs 22.5 lakh.

With 7.1% annual interest, the total amount after 15 years will be around Rs 40.68 lakh, according to the PPF calculator.

Interest earnings: Rs 40.68 lakh - Rs 22.5 lakh = Rs 18.18 lakh (tax-free).

Interest rate: For long tenures (5-10 years), banks are currently offering 6.5-7.5%. We assume 7%.

Investment: Rs 1.5 lakh per year

Tenure: 15 years

Tax: Interest will be taxed as per your tax slab (10%, 20%, or 30%).

Strategy: Start a new FD of Rs 1.5 lakh every year as FD tenures are usually up to 10 years.

Invest Rs 1.5 lakh every year in a lump sum FD for 15 years at 7% interest.
Investment amount: Rs 1.5 lakh × 15 = Rs 22.5 lakh.

After 15 years, the total amount with 7% annual compounding will be around Rs 41.32 lakh.

Interest earnings: Rs 41.32 lakh - Rs 22.5 lakh = Rs 18.82 lakh.

If you are in the 30% tax slab, then tax on 18.82 lakh = Rs 5.65 lakh.

Return: Rs 41.32 lakh - Rs 5.65 lakh = Rs 35.67 lakh.

If the FD rate is 7.5%, the pre-tax amount will be Rs 44.11 lakh, but even after tax it may be less than PPF.

Which is better?

If the tax slab is 20% or 30%, PPF will give higher returns, as its entire interest is tax-free. In FD, the net return is reduced due to tax. If the tax slab is 10% or 0%, FD may be slightly better, provided the interest rate is 7.5% or more. Both are safe, but the tax exemption and EEE status in PPF make it better for the long term. If you don't want to wait for 15 years and need to repay the loan quickly, choose FD (shorter term). But if the goal is 15 years (like for a home loan), then PPF is better, especially with the tax savings.