Planning for retirement is a crucial aspect of financial stability in the later stages of life. With various investment options available for retirement planning, such as Public Provident Fund (PPF) and National Pension System (NPS), choosing the right one can be a daunting task. Especially when you have 30 years before retiring, making the right choice is essential to secure a comfortable post-retirement life.
Firstly, let’s understand the basic differences between PPF and NPS. PPF is a long-term investment option offered by the government of India, providing guaranteed returns along with tax benefits. On the other hand, NPS is a market-linked investment scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA) that allows individuals to contribute towards their retirement fund.
When deciding between PPF and NPS for retirement planning with 30 years before retirement, there are some key factors to consider:
1. Returns: PPF offers a fixed interest rate that is determined by the government periodically. While the interest rate may vary, it generally ranges around 7-8% per annum. NPS, on the other hand, offers market-linked returns, which can potentially provide higher returns over the long term. However, it also comes with market-related risks.
2. Tax Benefits: Both PPF and NPS offer tax benefits under Section 80C of the Income Tax Act. Contributions made towards PPF are tax-deductible, while NPS offers an additional deduction of up to Rs. 50,000 under Section 80CCD(1B). Additionally, NPS also provides tax-free withdrawal benefits at the time of retirement.
3. Flexibility: PPF comes with a lock-in period of 15 years, while NPS has a lock-in period until the age of 60. However, NPS offers more flexibility in terms of investment options and asset allocation, allowing individuals to choose between equity, corporate bonds, and government securities.
4. Annuity: NPS requires individuals to use at least 40% of the accumulated corpus to purchase an annuity at the time of retirement, providing a regular income stream post-retirement. PPF does not offer annuity options, and the entire corpus can be withdrawn at maturity.
Considering these factors, the decision between PPF and NPS for retirement planning when you have 30 years before retiring ultimately depends on your risk tolerance, financial goals, and investment preferences. If you prefer guaranteed returns with lower risk, PPF may be a suitable option. On the other hand, if you are comfortable with market-linked returns and seeking higher growth potential, NPS could be the right choice.
It is advisable to consult with a financial advisor to determine the best retirement planning strategy based on your individual circumstances. A balanced approach that combines both PPF and NPS could also be an effective way to diversify your retirement portfolio and ensure financial security in your post-retirement years.
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adding to that u can also opt for corporate nps 6% of basic salary which is deducted directly from salary. Can invest around 80kish or more on nps per year to save tax
Also NRI can’t invest in PPF, but they can in NPS, so if he plans on moving abroad that will also be an issue
Here mention that it is return of active choice of allocation in nps.
NPS is taxable when u get the amount back.
Use Hindi language
Is NPS secured or risky
What about tax in NPS?
Good financial information
What about the loan option in PPF and NPS ..Given that amount of corpus in both scheme what is loan eligibility for both scheme ?
Sir Who can open NPS account is it only govt.employees or can anyone?
Great video as usual sir . Just to add ppf is even lower than 8% and nps should easily give more than 10% over long term if aggressive choice is selected
I'm 22 should i start investing in NPS for long term
Bro your views being slightly increased
Bcoz you create your content in English
Make video in hinglish so that you can increase your views
BTW nice content❤
Now in ppf only 7.1 intrest
Kindly provide real return percentage of NPS
For NPS it's totally depends on market whether its 10% or not it can be very less also as in case when the covid hit
The calculation wrong…he will get return on the 8%. Also
But is that 10% guaranteed?
How to start my NPS?? Pls guide
Nps accumulation is not fixed but market link…so how can you average 10 percent…market can give negative return
Masterstroke!! What a great short video..
Sir!! could you please also make detailed video on taxation invovled in NPS. Returns of NPS incl taxation.For eg there is a cap of 7.5 lacs on EPF + NPS contributions.
Also, best option to open NPS account.
Thank you 🙂
My nps account shows XIRR Rate of 8% only. Most of the nps funds have generated 8% around since inception not 10%
Can i have both EPF and PPF?
NPS Is market-linked.
So we will need to hope that these 30 years, a war or financial emergency does not come.
You are absolutely remarkable in imparting very sound analysis and advice sir
I really enjoy your videos
Thank you so much for your contribution
Annuity and not equity sir