ELSS Vs PPF – Which Tax Saving Investment Suits You?

elss-vs-ppfAre you looking for best tax saving investment options? If yes, PPF and ELSS are the two options that are recommended by financial advisors nationwide. These two popular tax saving investments comes with a bunch of lucrative benefits. If you find hard to choose one between these two, let us help you explore the pros and cons of ELSS and PPF investment.

ELSS Vs PPF- Tax Benefit

Under section 80C, the investments made in ELSS and PPF receive full tax deduction. Such investments fall under EEE category, which stands for Exempt, Exempt, and Exempt. The first exempt states that your investment is eligible for tax exemption. The second exempt means that you need not to pay on interest earned. The third exempt is for the maturity amount, which also stays tax-free. However, one can invest not more than 1.5 Lakh INR in a financial year.

ELSS vs PPF- Risk Factor

Since the money invested on ELSS and PPF follow different paths of growth, the risk level of both the investment mode vary significantly. ELSS investment stands on volatile share market, where value of shares is more likely to get affected by the fast changing market trends. This is what makes ELSS pretty risky. On the other hand, PPF are backed by the Government of India, where investments are made on government bonds. It is considered to be the most secure form of investment in India.

ELSS and PPF- Return Comparison

Where volatility affects ELSS investment value, there are also huge chances of it maximizing the returns manifold times; whereas PPF being a government organized investment mode offers interest on fixed rates. Those looking for best return in long term investments must go with equity plans. The average return also depends on time of making and redeeming an investment. Right move at right time can help you build more wealth in less time. When it comes to PPF, the interest rates are fixed on yearly basis, which is similar to bank FD. Investor may witness wild fluctuations on returns on ELSS investment, where PPF offers constant return.

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