NPS vs PPF, which one to choose for retirement?
NPS stands for New Pension System. And PPF means Public Provident Fund. Which should be chosen for leisure life? Which will give you more opportunities? Find the truth through equitable discussions ‘Team savings’
Groundscape: NPS vs PPF, which one to choose for retirement? Public Provident Fund or New Pension System? Do you trust the old method or the new one? Both are ‘official’, in both cases, the reason for disbelief has not come to the public till today. If your goal is to be comfortable in retirement, what is ideal for retirement savings? The answer to this question is not very quick, it will be found after a lot of comparative discussions – even that may not be exactly the case for you.
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|But if the comparison has to be done properly, then on what basis should it be done? We are highlighting certain issues –
(A) tax benefits,
(C) The method of investment and other conditions relating thereto.
(D) Benefit of getting the loan.
Let’s start comparative practice one by one. If you look at the tax benefits, it is good to know that you will get a benefit of up to Rs 1.5 lakh if you buy PPF. Find out how much interest you will get in PPF at the moment, and it is a known fact that ordinary people still enjoy the guarantee of getting this interest with their eyes closed.
In comparison, NPS subscribers get the same (up to Rs. 1.5 lakh) tax-saving opportunity. That is, Section 80C is applicable to both. However, an additional benefit of Rs. 50,000 / – can be availed in NPS under Section 80 CCD (I B).
There is nothing new to say about liquidity, as the old investors know the terms of PPF very well. Its term is 15 years long. And after maturity, you can completely ‘withdraw’ the balance. However, there is also the freedom to extend it for another five years.
NPS, however, is one of the best ways to put your retirement contribution into a market-dependent project. When the time comes, the subscriber can withdraw the lump-sum (conditional), the rest (in this case 40%) must be invested in the annuity plan. There are a couple of other minor conditions, due to lack of space, I did not write about them.
The two main conditions are mentioned, the rest is the benefits of investing and the issues related to it. You see, in the age of online investment, where mobile technology is so rampant, digital investment has become much easier and hassle-free. That’s the decent thing to do, and it should end there. On the other hand, in the case of PPF, there is a facility to take the loan, which is not available in NPS. So there is no doubt that the first one will win if tested on the basis of this factor.
Savings Advice: NPS and PPF both have their own advantages, which the other does not. But remember, you can get a little higher return on NPS. So the long-term investor who is willing to make a little adjustment to retirement planning may prefer NPS. Of course, if you want to take refuge in a low but promised return, your public PPF will be fine.
‘Savings’ wants you to be overall successful in your pension plan. So I tell you, choose both. Keep the retirement corpus partially in the NPS. The rest is in PPF. It is up to you to decide how your assets will be allocated between the two.