ELSS vs PPF

ELSS and PPF are two different investment options with different features. ELSS is a type of mutual fund that invests primarily in equity shares of companies. It has a lock-in period of 3 years and offers tax benefits under Section 80C of the Income Tax Act. PPF is a government-backed savings scheme that offers guaranteed returns and tax benefits under Section 80C. It has a lock-in period of 15 years. The choice between the two depends on your investment goals, risk appetite, and financial situation.

Over a longer time period, PPF provides significantly lower returns than ELSS. PPF is more advantageous in terms of tax gains and capital security; however, ELSS is a viable choice for higher and market-linked returns. Although both are beneficial in terms of tax savings, only PPF offers tax-free returns.

ELSS offers dual benefits of tax-saving and market-linked wealth creation in the long run. It comes with a lock-in period of 3 years. Investors with a higher risk tolerance often select ELSS over PPF. Being a mutual fund, a significant portion of the fund goes into equities. Equities are subject to market risk and volatility

PPF is best suited for risk-averse individuals who can afford a 15-year lock-in period. ELSS is suitable for investors who are willing to take a moderate risk to earn higher returns. The best way to keep ELSS risk to a minimum is to stay invested for the long term.