The Public Provident Fund (PPF) has remained one of the most popular tax-saving products across generations. The PPF derives its advantage from the EEE benefit (it's a Triple-E, or triple-Exempt product) -it saves tax at the time of investment, the interest is tax-free and the proceeds at the time of maturity are also tax-free.

This product is for a period of 15 years, providing partial liquidity after five years. Based on the Shyamala Gopinath-led panel's recommendation, the interest rate is linked to the 10-year government securities (G-Secs).

But Equity-Linked Saving Schemes (ELSSs) have outperformed the most popular tax-saving scheme PPF very handsomely. If we check how PPF stacks up against ELSS schemes for an annual investment of Rs 1 lakh over the last 15 years,  ELSSs delivered almost thrice the PPF amount. Even an average performing ELSS would have given more than 1.5 times the PPF maturity amount.

This performance was in spite of some turbulent times, such as tech or internet bubble bursts, the WTC attack, the Iraq war, the sub-prime & euro crises, and a government regime racked by policy paralysis.

ELSSs may have delivered the best possible returns, yet people fail to embrace them wholeheartedly because data fails to convince people. It is like speaking the left brain language whereas people invest using their right brain.

People who are not used to investing in the stock markets are sceptical about investing in ELSS. The reason is very simple. It is like asking a person who doesn't know how to drive to get into a brand new car alone and drive it. This will certainly freeze the person the moment he gets behind the steering wheel.

The fear of losing money gets processed in the same part of the brain that deals with death and mortality. What is interesting to note is that once we get comfortable at driving, it becomes a habit.

Look at 10 year horizon

So let me present some data that may nudge people to invest and retire rich. We studied the rolling return of the sensex over the last 25 years.

For one year, the rolling return suggests that there is only 60% probability of making money from equity investment if one invested with a 1-year time horizon. The gain probability increases to 78% and 87% for 3-year rolling & 5-year rolling return period respectively. It is interesting to note that you are almost certain to make money if you invested for a period of 10 years. Although the statutory lock-in period may be three years, if someone invests for over 10 years, then it is almost certain to create wealth through ELSS investments.