Investment Comparison Calculator

Cross-Asset Class Modeling: Equity SIP vs PPF vs NPS vs SSY vs FD

₹
₹
yrs

Equity SIP (12%)

₹0

High Risk, High Return, High Liquidity

NPS Aggressive (10%)

₹0

Tax saving, Lock-in till 60

SSY / Girl Child (8.2%)

₹0

Tax Free, 21yr Maturity

PPF (7.1%)

₹0

Tax Free, Sovereign Guarantee

Bank FD (6.5%)

₹0

Fully Taxable, High Liquidity

💡 Why Do You Need This Calculator?

When it comes to long-term investing, there is absolutely no "one size fits all" solution. Every financial instrument balances risk, return, lock-in periods, and tax benefits differently. You need the Investment Comparison Calculator because evaluating these options in isolation often leads to suboptimal, unbalanced financial choices that can literally cost you lakhs over a lifetime.

Historically, cautious investors heavily favored safe instruments like Bank FDs or PPF, entirely ignoring the long-term wealth destruction caused by silent inflation. By placing a traditional 6.5% Fixed Deposit right next to a 7.1% tax-free PPF, an 8.2% SSY account, and a 12% market-linked Equity SIP, the mathematical difference becomes visually staggering. You need this side-by-side comparison to clearly and objectively understand the true "cost of safety" versus the "reward of calculated risk." It proves mathematically why relying solely on safe assets might leave you severely underfunded, and why diversifying across different asset classes is absolutely essential to outpace inflation and achieve true financial freedom over a 15 to 30-year horizon.

📖 How to Use & Calculation Guide

Investment Comparison

How to use: Enter an initial lumpsum, a monthly investment amount, and your target time horizon. The system will process these exact identical inputs across all major asset classes simultaneously to generate a side-by-side comparison chart.

Calculation Details: The calculator applies strict compounding rules to each asset class using standard interest rates.
• Equity SIP is compounded monthly at 12%.
• NPS is compounded monthly at 10%.
• SSY compounds annually at 8.2% (with deposits stopping after year 15).
• PPF compounds annually at 7.1%.
• Bank FDs compound quarterly at 6.5%.

Portfolio Architecture

Cross-Asset Allocation in India: Balancing Returns, Risk & Taxation

Successful long-term wealth building in India requires understanding that no single financial asset is flawless. Equity mutual funds deliver outstanding inflation-beating growth but subject the investor to severe market drawdowns. PPF and SSY offer absolute sovereign safety and 100% tax exemption but are constrained by deposit caps and lower real yields. Bank FDs provide liquidity but suffer from severe post-tax negative real returns.

Comparing these instruments across identical timeframes and deposit amounts reveals the true cost of safety and guides the construction of an all-weather portfolio.

Advertisement

📊 Master Asset Comparison Matrix: India's Top 5 Savings Vehicles

Instrument Expected Return Risk Level Tax on Deposit Tax on Returns Tax on Maturity Lock-In
Equity SIP (Mutual Funds) 12% - 14% CAGR Moderate to High None (except ELSS) Exempt until sold 12.5% LTCG > ₹1.25L None (Liquid)
NPS (Tier-1) 10% - 12% CAGR Moderate 80CCD (up to ₹2L) Tax-Exempt accrual 60% Tax-Free / 40% Annuity Till Age 60
Public Provident Fund (PPF) 7.1% p.a. Zero (Sovereign) Section 80C 100% Tax-Free (EEE) 100% Tax-Free (EEE) 15 Years
Sukanya Samriddhi (SSY) 8.2% p.a. Zero (Sovereign) Section 80C 100% Tax-Free (EEE) 100% Tax-Free (EEE) 21 Years
Bank Fixed Deposit (FD) 6.5% - 7.2% Low (₹5L DICGC) None (except 5-yr tax FD) Taxed at Income Slab Taxed at Income Slab Flexible (Penalty)
Advertisement

🧮 The Real Return Calculation (The Fisher Effect)

Never evaluate financial instruments by nominal returns alone. Real wealth growth depends strictly on your post-tax, post-inflation purchasing power:

Real Rate of Return = [ (1 + Post-Tax Nominal Rate) / (1 + Inflation Rate) ] - 1
Bank FD in 30% Tax Slab (6% Inflation) Nominal Return: 7.0% | Post-Tax Return: 4.90%
Real Annual Return: -1.04% (Wealth Destroyer!)
Equity SIP with Budget 2024 LTCG (6% Inflation) Nominal Return: 12.0% | Post-Tax Return: ~10.75%
Real Annual Return: +4.48% (Generational Wealth!)
Knowledge Base

❓ Frequently Asked Questions (FAQs)

Which investment vehicle offers the highest historical returns in India?

Equity Mutual Funds (via SIP) have historically delivered the highest returns over 10 to 20-year horizons, delivering 12% to 14% CAGR compared to 8.2% for SSY, 7.1% for PPF, and 6.5%-7.2% for Bank FDs. However, equity mutual funds carry market risk, whereas government savings schemes carry sovereign safety.

How does inflation erode the real returns of a Bank Fixed Deposit (FD)?

If a Bank FD yields 7.0% per annum and you are in the 30% income tax bracket, your post-tax return is only 4.90% [7% × (1 - 0.30)]. If inflation (CPI) is 6.0%, your real purchasing power return is negative: -1.10% per year! Over time, bank FDs destroy real wealth for high-bracket taxpayers.

What is the Fisher equation for calculating Real Rate of Return?

The exact real rate of return is calculated using the formula: Real Rate = [(1 + Nominal Post-Tax Rate) / (1 + Inflation Rate)] - 1. For an investment returning 12% in a 6% inflation environment, the real compounding rate is approximately 5.66% per annum.

How do PPF and SSY compare against each other?

Both enjoy 100% sovereign backing and Exempt-Exempt-Exempt (EEE) tax status. However, SSY offers a significantly higher interest rate (8.2% vs 7.1%) but is strictly restricted to girl children up to age 10 with a 21-year maturity. PPF is available to all Indian resident citizens of any age with a 15-year maturity.

Why should an investor diversify across both equity SIP and sovereign debt?

A blended asset allocation (e.g., 60% Equity SIP, 20% NPS, 10% PPF/SSY, 10% Liquid) delivers the optimal Sharpe ratio: equity generates high real returns to beat inflation, while sovereign debt protects the portfolio during prolonged stock market crashes.

Under Budget 2024, how does the tax treatment of mutual funds compare to PPF?

PPF maturity proceeds remain 100% tax-free under Section 10(11). Under Budget 2024, Equity Mutual Fund Long-Term Capital Gains (LTCG) are taxed at 12.5% on profits exceeding ₹1.25 Lakh per financial year, and Debt Mutual Funds are taxed at income slab rates.

Can I use NPS solely as an equity investment tool?

Under the Active Choice option of NPS Tier-1, you can allocate up to a maximum of 75% in Asset Class E (Equities) up to age 50, which gradually decreases thereafter. The remaining 25% must be allocated to corporate bonds or government gilts.

What is the optimal investment strategy for someone in their late 20s?

With a 30+ year investment runway, a 28-year-old should adopt an aggressive accumulation stance: 65%-70% in diversified Equity Mutual Funds (via Step-Up SIP), 15% in NPS (utilizing Section 80CCD tax benefits), and 15% in PPF or liquid emergency funds for bedrock stability.