Investing in PPF (Public Provident Fund) and RD (Recurring Deposit) are two of the most popular ways to save in India. But if you deposit ₹1 lakh annually for 10 years, which scheme will grow your money faster? Let’s break it down.

🏦 1. Understanding PPF

  • Tenure: 15 years (extendable in 5-year blocks)
  • Interest Rate: Compounded annually (currently around 7–7.5% p.a.)
  • Tax Benefits: Contributions, interest earned, and maturity amount are tax-free under Section 80C
  • Flexibility: Partial withdrawals allowed after 5 years; loans against PPF possible

💵 2. Understanding RD

  • Tenure: Typically 12–120 months (1–10 years)
  • Interest Rate: Compounded quarterly (around 6–7% p.a., depends on bank)
  • Tax Benefits: Principal eligible for Section 80C, but interest is taxable
  • Flexibility: Premature withdrawal is allowed but may incur penalty

📊 3. Investment Comparison: ₹1 Lakh Annually for 10 Years

Feature

PPF

RD

Annual Investment

₹1,00,000

₹1,00,000

Interest Rate

7.1% (compounded yearly)

6.5% (compounded quarterly)

Tax

Tax-free

Taxable

Maturity Value (Approx.)

₹15.9 lakh

₹14.1 lakh

Tenure

15 years

10 years

Observation: Although RD completes in 10 years, PPF grows larger due to higher interest and tax-free compounding, even if you continue for 15 years.

🧮 4. Why PPF May Make You Richer

  • Compounding Effect: Annual contributions earn interest on previous years’ interest
  • Tax-Free Growth: The entire maturity amount is tax-free, unlike RD
  • Long-Term Wealth Creation: Extending PPF after 15 years can further multiply your corpus

💡 5. Who Should Choose Which?

  • Choose PPF: If you aim for long-term wealth and tax-free returns
  • Choose RD: If you want short-term savings with fixed interest and access after 10 years



Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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Balasahana Suresh

19/09/2025 10:15 PM