Gold Vs PPF: Here’s How Rs 50,000 Annual Investment Can Grow In 15 Years

A sizeable corpus fund can be conveniently created in the long run with small investments every month. Long-term wealth creation strategy needs financial discipline and diversification of one's portfolio. Despite the rising preference for high-risk-high-reward instruments like equities among a section of investors, a few assets still remain preferred options for risk-averse investors. When it comes to long-term investments, people often turn to time-tested options like gold and Public Provident Fund (PPF).

Both are seen as safe avenues, but they work very differently. So, if you invest Rs 50,000 every year for 15 years in each, which one is likely to yield better returns?

PPF is a government-backed savings scheme offering tax-free interest and returns under Section 80C of the Income Tax Act, 1961. The current PPF interest rate is 7.1% per annum (as of August 2025), compounded annually.

If you invest Rs 50,000 annually for 15 years, your total investment will be Rs 7.5 lakh. Using compound interest, at an expected return of 7.1% per annum, your corpus at maturity would be approximately Rs 13.56 lakh. The entire amount is tax-free on maturity, making PPF an attractive choice for conservative investors aiming for guaranteed returns and tax benefits.

Gold has always been a go-to asset during economic uncertainties and inflation. But its returns can be volatile and are subject to market fluctuations.

As per past trends, gold investments have delivered an average annual return of around 10%, though this can fluctuate significantly based on the timing of entry and exit.

Assuming an average annual return of 10%, a monthly investment of Rs 4,200 (Rs 50,400 annually) in gold over 15 years could grow to around Rs 19.34 lakh. This is based on a total investment of Rs 7.64 lakh over 15 years.

However, gold investments attract capital gains taxes, unlike the PPF. The taxation of gold depends on the holding period of the asset. Long-term capital gains (LTCG) on gold are taxed at 12.5% without the benefit of indexation, while short-term capital gains (STCG) are taxed according to the investor’s applicable income tax slab.

PPF has a lock-in of 15 years, with limited partial withdrawal options after the 7th year. Gold, whether in physical or digital form, is more liquid and can be sold anytime, but it comes with a price risk and storage concerns in the case of physical gold.

Overall, if you are looking for guaranteed and tax-free returns with zero market risk, PPF could be the preferred choice. It is ideal for disciplined savers with a low-risk appetite.

However, if you are comfortable with some volatility and want to hedge against inflation or currency devaluation, gold might deliver better returns, though with tax implications and market risks.

For long-term wealth creation, a balanced portfolio that includes both gold and PPF could be the smartest move.