Retirement is closer than you think. Saving for the future is the best financial strategy for a stable old-age life. Though there are various financial instruments available in the market, two government-backed schemes are the most prominent — Public Provident Fund (PPF) and National Pension System (NPS). Here’s a detailed comparison of both schemes for you.
Safety vs. Growth
PPF: Guaranteed returns by the government, like savings account interest. Steady growth, but potentially lower.
NPS: Invested in the stock market, so potentially higher returns, but also riskier.
Accessing Your Money
PPF: Less flexible – locked in for 15 years, with some access after 5 years.
NPS: More flexible – easier access to some funds after a while, but a big chunk is locked for retirement income (taxable).
Tax Benefits
PPF: The clear winner! You don’t pay taxes on your investment, interest, or even the final amount.
NPS: Get tax breaks on contributions, but some of the final amount is taxable.
Who should choose what?
PPF is good for: People who prioritize guaranteed returns, tax benefits, and some access to their money later, even with potentially lower growth.
NPS is good for: People comfortable with some risk for potentially higher returns and a long-term plan (20+ years). They are okay with limited access to funds after retirement.
According to experts, consider using both PPF and NPS for a balanced portfolio with security, tax benefits, and growth potential.
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