ELSS vs ULIP vs PPF: Which Is the Best Investment Option?

What Is an ELSS?

What Is a ULIP?

What Is a PPF?

What Are the Differences Between ULIP, ELSS and PPF?

Below is a table illustrating the difference between three of India's most popular tax-saving investment options:

Parameters ULIP ELSS PPF
Minimum lock-in period 5 years 3 years 15 years
Minimum investment amount ₹1,500 per month ₹500 (via SIPs) ₹500
Rate of returns Dynamic. It depends on the percentage of equities, debt and balanced funds included in ULIP policy. However, on average, it tends to be 16%. Dynamic, but on average, it tends to be 12% to 14%. It can be changed in any quarter as per the Union Government’s decision. The current rate is 7.10%.
Risks involved It depends on the funds in which one invests money. For example, if the investor chooses to invest in equity funds, there will be more risks than in debt funds. ELSS are equity funds. Hence they are subjected to market-related risks. It is a government-backed investment tool, so there are no risks involved.
Purpose of the plan It will provide life insurance coverage and help you accumulate wealth over time. ELSS will allow investors to create wealth and, at the same time, save on paying taxes. It will help you save money and create wealth for retirement.
Charges Administration charges, fund management charges, mortality charges, premium allocation charges etc. Schemes expenses and exit load in some cases. The banks or post office will charge you a one-time fee of ₹100 for opening the PPF account for you.

Now that you know the significant differences between ELSS, ULIP and PPF, you can make an informed choice when investing. As an investor, you need to weigh all the factors mentioned above. Many people invest in all three options, and you can do that too. However, it would be best to consider factors like your risk appetite, investment goals, and investment horizon.

FAQs on the Difference between ELSS, ULIP and PPF

Are there any risk covers related to ULIP? up-arrow

Yes, ULIP policies do provide risk covers to policyholders. In the event of an untimely death of the policyholder, the insurer will give a sum assured to the nominee. It is a unique feature of ULIP that both the ELSS nor PPF will not offer to its investors.

What are the withdrawal or redemption policies related to PPF? up-arrow

Investors can partially withdraw their funds from PPF after five years of creating and investing in the PPF account. However, an investor can make only one withdrawal in a particular financial year. Investors can ultimately redeem the funds after 15 years of holding a PPF account.

Can you redeem your entire ELSS investment in one go? up-arrow

If you have made your ELSS Mutual Fund investment via the lump sum route, the units will all be allotted to you on the same day. In this case, after the 3-year lock-in period, you can redeem your entire ELSS investment in one go.

Can I transfer my PPF account to another branch or office? up-arrow

Yes, you can transfer your PPF account from one post office branch to another or from one bank to another. All you need to do is visit the existing bank or PO and submit an application to change the bank or branch. After this, the bank/branch will initiate the change process with due diligence. This process will take almost a week to successfully change your PPF account to a new bank or branch.