Mutual Funds - What is difference between PPF and ELSS

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Both ELSS and PPF are great investments for section 80C deduction of income tax act. However, there are some basic differences one should be understood before taking an investing decision.





ELSS is an equity mutual funds which invests primarily in shares or shares related investments

PPF is an investment vehicle which is like fixed deposit for long term period (15 years). One can invest monthly, quarterly or lump sum etc.


The returns in ELSS is not fixed and is completely dependent on equity market’s performance.

The returns obtained are fixed. The present rate of interest is 8.7% compounded annually. However, the rate of interest can change any time as per government policies.


There is no guarantee of principle safety in ELSS. However, equity investments generally give positive returns in long-term. As per our research, BSE SENSEX has delivered an annual return of 12.78% in past 10 years.

It’s government sponsored scheme and it’s completely safe.


Amount Invested in ELSS can be withdrawn any time after 3 years.

PPF have very low liquidity. One can withdraw certain amount after 7th year from PPF account, but overall it’s a scheme for long term investment only.


The tenure ranges from three years till any time period as per the choice of investor

The minimum tenure is 15 years which can be increased further in a block of 3 years.

Lock in period

There is lock-in period of 3 years.

The lock-in period in PPF is 15 years. One can’t close PPF before the completion of full 15 years.

Online transaction

ELSS can be done Online. An investor can invest or sell ELSS fund any time

For PPF, some banks have started giving online facility. However, first-time investor has to visit the bank and do the initial registration by submitting documents.

Further, we advise you to consult your advisor or check your risk profile before making any investing decision.

Source : eCRM Team back