National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in January 2004 for government employees. It was opened to all sections in 2009. A subscriber can contribute regularly in a pension account during her working life, withdraw a part of the corpus in a lumpsum and use the remaining corpus to buy an annuity to secure a regular income after retirement.
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Should you invest in NPS (National Pension Scheme) or what to choose for Retirement Planning?
Retirement planning is an essential part of financial stability in one’s golden years. With various options available in the market, it can often become overwhelming to select the best retirement plan. One such option is the National Pension Scheme (NPS) offered by the government. In this article, we will explore whether investing in NPS is a good choice for retirement planning and what other alternatives are available.
The NPS is a voluntary, long-term retirement savings scheme launched by the Government of India. It aims to provide retirees with a regular income during their post-retirement years. One of the key advantages of NPS is that it offers tax benefits under Section 80C and Section 80CCD of the Income Tax Act.
One of the main reasons to consider investing in NPS is the potential for high returns. The scheme offers multiple investment options like equity funds, corporate bonds, and government securities, allowing individuals to choose as per their risk appetite. It also provides the flexibility to switch between these funds based on market conditions and changing preferences. Over the long term, this can result in substantial growth of one’s retirement corpus.
Additionally, NPS has low charges and management fees compared to similar retirement schemes offered by private players. This aspect makes it cost-effective and helps individuals maximize their savings. Moreover, NPS offers a tiered withdrawal facility, allowing individuals to withdraw a portion of their accumulated corpus in a phased manner after retirement.
However, there are certain factors to consider before investing in NPS. Firstly, NPS has a lock-in period until the investor reaches the age of 60. This means that the funds cannot be accessed before retirement except under specific circumstances. Therefore, if you require liquidity or foresee any immediate financial requirements, NPS may not be the best choice.
Another point to consider is the volatility of the stock market. Since NPS offers an equity investment option, the returns are subject to market risks. While equities have the potential for higher returns, they also come with higher volatility and uncertainty. If you are risk-averse and prefer a more stable retirement plan, you may want to explore other options such as fixed deposits, Public Provident Fund (PPF), or senior citizen savings schemes.
In summary, investing in NPS can be a suitable option for retirement planning, considering its tax benefits, potential for high returns, and low charges. However, individuals should carefully evaluate their risk tolerance, liquidity needs, and long-term financial goals before committing to NPS. It is advisable to seek guidance from a financial advisor who can analyze your specific situation and provide personalized retirement planning solutions.
Ultimately, the choice of a retirement plan depends on individual preferences and circumstances. It is essential to consider factors like risk appetite, return expectations, time horizon, and liquidity requirements while making this decision. By doing comprehensive research and seeking professional advice, individuals can make an informed choice that aligns with their retirement goals and ensures financial security in their post-work life.
What about flexi cap tax when needed to withdraw
People in 30% tax bracket have their 80c limit already exhausted due to high PF.
I am investing in both Elss and NPS
Bhai maths correction ha
Nps is still better. After withdrawal of 60%, rest 40% is used to buy pension fund which is necessary in old age.
Most important part missing is human behaviour
When withdrawal is easy it’s hard to follow 30 years discipline
So nps useful for non descipline investors
And in human lifes their are 2 many events which require lumsum money
So if you are very serious about retirement
Nps is better choice
What about the tax we need to pay for long term investment.
From where did we get this numbers 11 and 13?
Sir,
APY EPF NPS ka pension ek sath le sakte hai kya?
OPS IS BETTER.nps itna accha hota to sare neta khud lelete. NPS GOOD JOCK
bekar hi bhaiya isse acha mutual fund hi
On investment of 50,000 I get return 15,000
So, my investment is 50,000 and it will grow in future
and one who invested only 35000 will also grow in future…..
in both case investment is different.
but the first who invested in nps will get 15000 return, but who invested 35000 will get nothing. Please consider these 15000 as cashback and as percentage return.
ultimately NPS will give you better returns
if gopal invested 50000(10%) in a year then his total investment is 120000,. because govt will invest 70000(14%) on behalf of gopal….ab calculate kro Bhai……
What if I withdraw the amount for say buying house and kids marriage I will be able to get my money back right and by the time we turn 60 laws would have changed to make it flexible for us to withdraw entire amt.
11% return on nps is bare minimum to auto invest. If the guy chooses his portfolios for his funds in nps just like flexi cap which he can do in nps as well he can get 14% bare minimum return easily at 60% equity investment (medium risk) on whole 50k investment. That corpus would be much more than flexi cap plus no tax.
Why not considering tax saving mutual funds or elss? He could invest entire 50k
60% of 1.23 CR = 73 Lakhs bro
After 60 yrs he get Pension every month
First guy surely save 30% even he will earns 0% from investment but second guy can be earns or may be in loss if he gets only 8% by his investment due to inflation. Point is first one is earning 30% on his investment definitely and other one may be earn or loss.
but the second guy needs to pay ltcg
Sir only one thing might not have been taken into account. The guy who invests in NPS saves 15000/- on taxes what if he invests that amount in some good flexi cap fund which gives 13% return? I think this amount will also be one significant . As per my calculations it becomes around 50,00,000/- i.e. 50 lakh