Gold investment1 min ago
SIP vs NPS: Planning to invest Rs 12,000 per month? Here's which one can provide better returns on investment for 20 years
- Written by Bhawna Gupta
Published: Zee Business| Updated: Zee Business
The National Pension Scheme (NPS) is a government-backed retirement scheme for all Indian citizens. This is managed by the Pension Fund Regulatory and Development Authority (PFRDA). On the other hand, SIP is a mutual fund investment in which you can invest an amount regularly to build a corpus for long-term goals. Both are considered good ways of investment, but don't fulfill the same financial goals. This article will talk about returns on a Rs 12,000 monthly investment for 20 years and compare which one can provide better returns.
Images: Pixabay
1/10
Types of NPS accounts
1/10Pension account (Tier I): There are some restrictions on withdrawal. Voluntary savings account (Tier-II): Under this, you can withdraw money easily.
2/10
How does NPS investment work?
2/10You can withdraw part of your investment at 60, and the remaining amount can be used to buy an annuity for a regular pension.
3/10
What is SIP?
3/10SIP is a way to invest in mutual funds. This is linked to market fluctuations. However, you get benefits like rupee cost averaging, compound interest, and freedom to choose investment amounts and types of funds.
4/10
SIP vs NPS
4/10In SIPs, you can invest for a short to long-term period, while in NPS, it is required to wait till the age of 60.
5/10
Tax benefits
5/10In NPS, you can build a tax-free retirement fund, while you have to pay tax on returns in SIP mutual fund investments.
6/10
SIP: How much corpus can you build if you invest Rs 12,000 monthly for 20 years?
6/10If you invest Rs 12,000 per month in mutual funds through SIPs, you can build a corpus of Rs 1,10,38,288 (Rs 1.10 crore) in 20 years.
7/10
Understand calculations
7/10Total investment: Rs 28,80,000 Period: 20 years Expected returns: 12% Total Returns: Rs 1,10,38,288
8/10
NPS: How much corpus can you build if you invest Rs 12,000 monthly for 20 years?
8/10Monthly contribution: Rs 12,000 Investment duration: 20 years Annualised return: 12%
9/10
Calculations
9/10Total investment: Rs 28,80,000 Maturity amount: Rs 1,19,89,775 Interest earned: Rs 91,09,775 Monthly pension: Rs 19,983
10/10
Conclusion
10/10Choosing NPS or SIP for investments depends on investors' needs. It depends on various factors like duration, risk appetite, government scheme, among others.
- 1
- 2
- 3
- 4
- 5
- 6