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PPF vs ELSS vs ULIP: Which investment scheme suits you most?

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In comparison with ELSS, although PPF and ULIP look more attractive in terms of tax saving, but in terms of returns, ELSS can be more rewarding, suggests Pranjal Kamra, CEO, Finology.

PPF vs ELSS vs ULIP: Which investment scheme suits you most?
Public Provident Fund (PPF), equity-linked saving scheme (ELSS) and Unit Linked Insurance Plan (ULIP) are some of the popular investment options that also qualify for tax deductions. While PPF is a retirement-focused investment instrument, ELSS is a tax-saving mutual fund.
On the other hand, ULIP is a life insurance product that offers risk cover for the insured together with investment options.
Choosing between these investment options, as experts say, very much depends on the current income and future goals.
Additionally, all these investment options come with their own set of benefits. Investors should, hence, consider all factors such as rate of return, the investment horizon and liquidity/lock-in period before choosing any of these options.
In comparison with ELSS, although PPF and ULIP look more attractive in terms of tax saving, but in terms of returns, ELSS can be more rewarding, suggests Pranjal Kamra, CEO, Finology.
"Additionally, ELSS offers higher liquidity (as investors can withdraw their investments after 3 years) while PPF and ULIP come with a lock-in period of 15 years and 5 years respectively," he opines.
However, the important thing to note here is that ELSS investments are market linked and thus, the returns are volatile.
"The best way to manage the risk associated with ELSS or any equity instrument is by staying invested for the long term. Therefore, for long term financial goals, it is wise to choose ELSS over PPF and ULIP plans," Kamra advises.
Talking about risk facts, PPF comes with relatively lower risk at the cost of returns, which matches the rate of inflation over time.
"While ELSS with its exposure to equity markets can potentially deliver a strong return whilst taking the risk of equity market investment,” explains Gautam Kalia, head – investment solutions, Sharekhan by BNP Paribas.
Meanwhile, investors for whom convenience is the preference can invest in ULIP as it covers three things in one go - insurance, investment and tax-saving, experts opine.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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