NPS: Tips to turn your small monthly investment into over Rs 2 crore - With decreasing interest rates on most of the popular saving schemes in India, many people have turned to investment schemes with low risk and higher returns like Public Provident Fund (PPF), Systematic Investment Plan, Gold Exchange Traded Funds (ETFs) and many more. National Pension System (NPS) is another such investment option and is one of the most popular investing destinations at present in India. 

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The National Pension Scheme (NPS) has emerged as a good option for someone seeking a low-cost investing opportunity, while at the same time saving big through tax deductions. The government-backed retirement scheme's benefits, interest rates and easy to manage online portal have encouraged subscribers to secure post-retirement life.  

NPS Calculator: Tips to turn your small investment into over Rs 2 crore

Invest Rs 12,500 monthly in NPS 

Contributing till the age of : 60 years

Total years of contribution - 30 years (If you start investing at the age of 30 years-we will discuss this in the below of section of 'Power of Compounding')

Expectation of return on investment is - 10%

Your Expected Monthly Pension will be - Rs 46,146

And you can create a retirement corpus of nearly Rs 2,37,03,119

In fact, not just this by investing monthly or annually in NPS, you can considerably reduce your taxable income every year.

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Investment Process

 

Individuals can choose to invest in four types of assets
Equity
Corporate bonds
Government bonds
Alternative Investment Funds like CMBS, MBS, REITS, AIFs, Invlts etc.

NPS offers you two approaches to invest in your account:

Active choice
Auto choice

The pension cum investment option brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return. 

The NPS with both Tier 1 and 2 options have the lowest management costs of any pension programme. As the account maintenance is low, the benefit of accumulated pension wealth to the subscriber becomes larger. 

Also Read | NPS Tier 2 vs Mutual Fund: Ensure THIS before making investing decision | Pension calculator, scheme, returns