New Delhi:
Investing in the National Pension System (NPS) has many advantages. The most significant advantage is that it gives better returns than many investment schemes.
Therefore, if you start investing in this scheme early, then till retirement, you can accumulate tremendous funds, and your future life can pass without worrying about money.
This is a pension scheme, so you get one part of the deposit amount in a lump sum, while some part has to be purchased for annuity. You can look at allowance like a pension.
In the National Payment System, you get two benefits after maturity. You take home 60 percent of the funds generated in one go.
With the second part, i.e., 40%, you must buy an annuity. You get this every month, three months, six months, or annually.
With this, your financial condition remains sound after retirement. NPS is a market-linked scheme.
Hence market-related risks also stay in it. Be sure to keep this in mind before investing.
Prepare a fund of 1 crore
If you are 28 years old and invest 10 rupees every month in NPS and do this work till the age of 60 years, then the total amount deposited by you will be 38 lakh 40 thousand rupees.
Although the return on this is excellent, by adding the negative returns that sometimes happen, let’s consider the average return as 10 percent.
The total amount deposited in NPS has become Rs 2.80 crore. In this, you will get a 60 percent amount, i.e., Rs 1.6 crore in a lump sum, and a pension of Rs 75 thousand every month.
Negative returns in recent times
Satya Nadella, MD and CEO of Kfintech, writes that in the last few years, the way mutual funds are giving negative returns, almost the same situation has happened with NPS.
However, he says there is no need to scare investors from this. He believes that people should look at NPS just like a SIP.
According to Nadella, the main reason for the recent decline in the returns of MFs is the market leaning towards large-cap stocks.
He said that schemes related to equity tend to go down whenever this happens in the market.
Instead of panicking, people should keep investing in NPS because the fruits of this wait will be delightful in the future.
