Knowledge Base

Nowadays people expect that their investment option should help them in getting higher returns, save their tax and should also have low-risk of investing in them, keeping these factors in mind lets explore StockBasket vs Public Provident Fund in detail. PPF and StockBasket both qualify in this criteria but let’s see which is the best investment option among them.

Public Provident Fund

Public Provident Fund (PPF) is a savings-cum-tax saving investment instrument, it helps the investor to build a retirement corpus while saving on his annual taxes. It was introduced in India by National Savings Institute of the Ministry of Finance in 1968. PPF is considered to be the safest bet in the long-term. Now let’s have a look at the performance of PPF with respect to the below criteria’s:

Return on Investment

The interest rate on PPF is revised every quarter, the current rate for April 2020 quarter is 7.1%. The biggest advantage of PPF is it gives fixed returns over the period of time. The below table shows the interest rate (p.a) of PPF from 2015 to the current quarter. 

Though the interest rate is stable it does not have the capacity to beat the inflation rate.

Risk factor in PPF

Though PPF is a government-backed scheme, it is not a 100% risk-free investment instrument. PPF can be prone to default risk and re-investment risk. Default risk can happen in case of the government’s inability to pay the amount of money invested by investors, a reinvestment risk can occur when the rate of Interest offered on PPF does not remain the same after the tenure of 15 years for which the PPF was opened. 

Tax savings

PPF enjoys the EEE benefit (Exempt Exempt Exempt) i.e The Principal invested in PPF enjoys a tax deduction under Section 80C, up to a maximum of Rs 1.5 lakhs a year.

StockBasket

StockBasket is India’s first buy and hold long-term investing platform, it operates under the Samco brand. It has a pool of expert-curated ready-made basket of stocks designed as per the investor’s financial goals like International Vacation, Retirement plans, or saving for one’s child education. Investors have to hold the basket for at least 5 years for wealth creation.

Return on Investment:

The average return on investment in StockBasket is very high. The CAGR of average StockBasket lies between 15-17% which has the potential to double your investments in just 5 Years.

Risk factor in StockBasket:

Like other investments in Stocks, StockBasket is also dependent on the market forces and has the same risk, but due to expert-selected stocks of top companies in the basket, they usually have less impact of the market corrections on them.

Tax savings: The only benefit that you get by StockBasket is dividends are not taxed and they are directly credited to your bank account.

Summary

We can clearly say that though PPF’s are safe bets for investors, they have a low return on investment and because of which it has the moderate inflation-beating capacity, whereas in the case of StockBasket the investor the pleasure of high return on investment which thereby helps him to generate long term wealth creation.

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