Sources: PPF rate and limit from the official India Post rates table; equity capital-gains tax from sections 196 and 198 of the Income-tax Act, 2025.
Frequently asked questions
What is a SIP?
A SIP (systematic investment plan) puts a fixed amount into a mutual fund every month. Each payment buys units at that day’s price, so you invest steadily without timing the market.
Is it too late to start a SIP at 45?
No, but it costs more. ₹10,000 a month from 30 to 60 at 12% grows to ₹3.53 crore; started at 45, the same SIP grows to ₹50.46 lakh. To catch up you would need about ₹69,958 a month.
PPF or SIP — which is better for 15 years?
PPF pays a government-set rate (7.1% now) and is fully tax-free; a SIP in equity funds can earn more but can also fall. In the example, ₹1.2 lakh a year for 15 years gives ₹32.55 lakh in PPF and ₹46.56 lakh in a SIP at 12% after tax. Many people use both.
How is a SIP taxed when I sell?
Equity fund units held over 12 months are taxed at 12.5% on gains above ₹1.25 lakh a year; units held for less are taxed at 20%. Selling over a few years uses the exemption more than once.
What return should I expect from a SIP?
No one can promise one. The Nifty 50 with dividends grew 13.2% a year from 2000 to 2025, with years as bad as -51.27% in between. Plan with a lower figure; step 5 shows the difference.