Is Investing In NPS Worth It?, What is NPS?, Benefits of NPS, How to open NPS account online?, Who can join NPS?, What is the average return on NPS?, How much monthly should I invest in NPS?, Is it mandatory to invest every month in NPS?, How many years should I pay for NPS?, Can I withdraw my NPS anytime?, Is NPS better than PPF?, How much should I invest in NPS to get 50000 a month?
Yes, investing in NPS is worth it. In this article, I will present detailed information on the meaning of NPS, its benefits, how to open an NPS account online, who can join NPS, and many more.
What is NPS?
NPS or National Pension Scheme voluntary long-term contribution for retirement under the purview of the Pension Fund Regulatory and Development Authority (PFRDA) as well as the central government of India.
The objective of NPS is to promote a habit of saving among the citizens of India for their retirement. The scheme aims to find a suitable solution to the problem of senior citizens after retirement in India.
The savings by individuals are collected in a pool of pension Funds which is invested by professional fund managers in diversified portfolios including Government bonds, corporate debentures and shares, bills, etc. The contribution made by the applicant grows and accumulates for several years depending on the return earned by the amount invested.
Benefits of NPS or Is Investing In NPS Worth It?
1. Flexible: the applicant can decide to invest any amount in white range of investment options and choice of pension funds.
2. Portable: NPS provides portability among various locations and professions. It also allows hassle-free arrangements for the applicants while they can shift to the new job or location.
3. Ease of access: the NPS account can be managed online as it can be opened through eNPS portal.
4. Well regulated: NPS account is regulated by PFRDA. The account maintenance cost is comparatively less than the similar pension products throughout the world.
5. Anyone can manage their NPS account online by simply entering the login ID and password.
How to open NPS account online?
1. Visit the link and fill all the necessary details to open NPS account. After filling all the details, click on resume registration.
2. Follow all the steps given in the attachment to complete the process of account opening. (https://www.npscra.nsdl.co.in/download/pdf/Registration_using_PAN.PDF)
Who can join NPS?
Any individual between age 18 to 70 years on the date of submission of an application to open the NPS account. The applicant can join NPS either as an individual or as a corporate group of employer and employee. The contribution in the account is made till 60 years of age.
What is the average return on NPS?
The average return of NPS since inception in tier 1 is around 10% and tier 2 is around 9%.
How much monthly should I invest in NPS?
The minimum amount to be invested monthly in NPS is Rs 500 or Rs 6,000 yearly in tier 1 and Rs 2,000 yearly in tier 2. The minimum is not contributed yearly than the account will be frozen. To unfreeze the account, the subscriber should have to pay the total minimum contribution for the period of freeze along with penalty of Rs 100.
Is it mandatory to invest every month in NPS?
No, it is not mandatory to invest every month in NPS. You can invest lump sum amount for entire year. You can invest more than Rs 2 lakh in a financial year to use the tax liability. You should invest at least Rs 50,000 each year for at least 25 years if you want to get decent return on investment.
How many years should I pay for NPS?
You can decide to pay for NPS till 60 years or 75 years. The pension is payable for 5, 10, 15, or 20 years and so on as long as you are alive.
Can I withdraw my NPS anytime?
The subscriber can go with withdrawal of lump sum amount In a phased manner, say 10 instalments, over the period from 60 years to 75 years. However, the subscriber can purchase the annuity before phased withdrawal.
Is NPS better than PPF?
Yes, NPS is better than PPF because equity pension funds under NPS provides higher returns in the long term. On the other hand, PPF generates fixed return on the fixed income category. Investment in PPF is less risky then NPS because investment in NPS depends on market.
Is NPS safer than mutual funds?
Yes, NPS is safer than mutual funds because risk is comparatively less. However, if you are ready to take the risk then you can go with mutual funds. The return on mutual funds depends on the market.
How much should I invest in NPS to get 50000 a month?
You should invest minimum 40% of the accumulated amount to purchase an annuity plan of Rs 1 crore. If the annuity rate of 6% of the amount, then you can get Rs 50,000 pension every month from NPS.
Frequently asked questions
1. I have invested in PPF, can I still invest in NPS?
Yes, you can invest in NPS because it is different from the provident fund
2. Is it necessary to invest in NPS each year?
Yes, it is necessary to invest in NPS each year, otherwise the account will freeze.
Disclaimer: If you want to invest in the stock market, you should consult your financial advisor before making a buying decision. You should assess the risk and study the company details.
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