September 27, 2010 6:18 am
I want to know if investment in NPS is better than Investment in EPF? If i have an option to invest in EPF or NPS than which i better for pension + investment.
Both EPF and NPS are different products and can not be compared. EPF is really a good product because it is very safe, gives tax benifit and you get tax free interest of 8.5 %
( this year 9.5 % ). At the end you get a big lump sum amount which you can invest or soend the way you want after your retirement. NPS is purely a penson product and linked to market. At the end , you have to buy annuity of the amount avalable in your NPS account and get regular pension. There are no fixed returns but the returns are market linked. Still it is very likely that you will get double digit returns in NPS if you are a long term investor.
My advice is: invest in both.
I would vote for EPF at the moment , despite the fact that NPS has equity option . If you want to invest in NPS anyways , then better invest in Equity oriented mutual funds , So you have to options
1) EPF + Equity mutual funds
You cant compare just NPS and EPF , as both are different asset class
In http://www.jagoinvestor,com/2009/05/nps-new-pension-scheme-detailed.html there is a clear statement that you can get a lump sum at your retirement and a fixed monthly income for the lifetime in NPS. It will work almost the same way as Private Pension Schemes .And if it has equity option and than, why cant we say that it is better than purely debt oriented EPF?.
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