In NPS, you can get higher returns than FD and PPF but market risk matters in this. The effect of market volatility is seen on NPS. This is not the case with PPF or FD.
Higher returns in NPS than FDs (indicative picture)
National Pension Scheme (NPS) is counted among the safest investments. People invest in NPS to get returns in the form of pension funds. The thing to keep in mind in this is that the return on investment will be completely based on the fund in which the NPS money is invested. There are around 8 pension funds in which the NPS plan subscriber can choose to invest. Similarly, NPS comprises of 4 asset classes in which the investing person can decide to deposit the fund money. The 4 asset classes are equities, corporate bonds, government bonds and alternate assets.
Looking at the record of the last few years, these different asset classes have given significant returns to the investors. This return has been seen even more than the fixed deposit. Higher returns are obtained when the investment time is kept longer. That is, the longer you keep the investment, the more chances of getting higher returns on it will increase. In July 2019, NPS on 1 year investment in equities gave 3.6 percent return while it was 9.5% for 3 years, 8.74 percent for 5 years and 10.67 percent since NPS was started.
who returns how much
The average NPS return in 1-year corporate bonds has been 13.59 per cent. 9 percent in 3 years, 10.34 percent in 5 years and 10.31 percent from the inception of the scheme till 2019. In government bonds, the returns of 20.28 percent in 1 year NPS, 10.29 percent in 3 years, 11.56 percent in 5 years and 10.15 percent from the inception of the scheme to 2019 have been given. In alternative assets, the return of 9.89 per cent on 1-year NPS and 7.67 per cent has been given since the inception of the scheme.
Talking about the average return, interest of 8 to 10 percent is available in NPS. Its lock in period is till retirement. In this, risks related to the market can be seen. In Equity Linked Savings Scheme, you can take 12 to 15% returns and have a lock-in period of 3 years. In this also risks or risks related to the market can be seen.
PPF has an average return of 8.1% which is guaranteed. It has a lock-in period of 15 years and there is no market risk involved. That is, it is completely risk free and the investor gets guaranteed returns. At number four is the fixed deposit, which gives guaranteed returns of 7 to 9 percent. It has a lock-in period of 5 years and investment in it is also completely risk free.
Comparison of NPS with PPF
National Pension Scheme (NPS) can give higher returns than PPF and FD but if we look at its potential at the end or at the time of maturity, it may lag behind PPA or FD. Here capacity means talking about the facilities related to retirement. When it comes to withdrawing money at the time of retirement, then NPS does not provide this facility because only 60 percent of it can be withdrawn. This is not the case with PPF and FD. The investor can withdraw money from both these schemes simultaneously.
Investing in NPS is advised to those people who are ignorant of market risks. Those who want to invest for long term can take the help of NPS. If you want to earn money by investing in equities through NPS, then there are many mutual funds in which one can invest. Before investing in NPS, compare it with other schemes, see the market risk and then invest.
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