NPS Vs PPF corpus calculation: Know how much retirement fund you can build
New Delhi: The onset of COVID-19 has as soon as once more highlighted the need to undertake deeper measures to make sure sufficient assist for people by way of their monetary well-being.
The monetary well-being not solely spreads accross your employment length however even after that. The crucial instances that we reside in has made us realise about our future planning and the way properly we are able to map it out for a superb retirement fund.
It the above context that we’re going to talk about about two such retirement fund plans –National Pension System (NPS) and Public Provident Fund (PPF).
Who can open National Pension System (NPS) Account?
Any particular person citizen of India (each resident and Non-resident) within the age group of 18-65 years (as on the date of submission of NPS utility) can be a part of NPS. Although, opening a number of NPS accounts for a person isn’t allowed below NPS, an Individual can have one account in NPS and one other account in Atal Pension Yojna.
Any particular person citizen of India (each resident and Non-resident) within the age group of 18-65 years (as on the date of submission of NPS utility) can be a part of NPS. But, do not be confused with joint account.
National Pension System account could be opened solely in particular person capability and can’t be opened or operated collectively or for and on behalf of HUF.
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Public Provident Fund tenure, funding restrict
You can open your Public Provident Fund (PPF) account in your personal identify in addition to on behalf of a minor. PPF is a 15-year funding scheme below which an investor enjoys tax exemption on the time of deposit, accrual of curiosity and withdrawal. Though PPF has a lock-in interval of 15 years, you can also make extension in a block of 5 years for tenures upto 20, 25 and 30 years.
The PPF Scheme, launched by the National Savings Organization in 1968 was geared toward making small financial savings a profitable funding choice.
A minimal of Rs 500 and a most of Rs 1.5 lakh every year could be deposited yearly in a PPF account at current. Deposits could be accomplished most in 12 transactions. However, it’s essential to be aware that when you deposit greater than Rs1.5 lakh in your PPF account every year, the surplus quantity will neither earn any curiosity nor shall be eligible for rebate below Income Tax Act.
From 01.04.2020, rates of interest are on PPF has been 7.1 % every year (compounded yearly) whereas NPS provides a mean curiosity of 9 %.
Consider the next desk to analyse the 2 funds NPS Vs PPF.
| NPS vs PPF : Comparison between the retirement corpus/fund | ||
|---|---|---|
| Sanjiv | Sahil | |
| Investment choice | NPS | PPF |
| Average return PA | 9% | 7.1% |
| Investment quantity yearly | Rs 1.5 lakh | Rs 1.5 lakh |
| Investment interval | 30 years | 30 years |
| Investment in 30 years | Rs 45 lakh | Rs 45 lakh |
| Retirement corpus | Rs 1.82 crore | Rs 1.09 crore |
| Total fund/corpus Value |
Annuity worth= Rs 92 lakh One time worth= Rs 1.38 crore Total worth (annuity + one time)= Rs 2.30 crore |
Rs 1.54 crore (Maturity Value) |
The calculations are primarily based on assumptive figures (solely a tough calculation), whereas one is suggested to verify and ensure earlier than deciding on a corpus plan. It should even be stored in thoughts that the rates of interest on small financial savings scheme like PPF are revised quarterly.
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