But ppf we can withdraw after 15 years . Say we invested at age 30, and by age 45 the corpus will be more than 40 lakhs if we are investing 1.5 lakhs per year. But in nps we have to stay invested till age 60 and then we can withdraw the 60%. In my opinion we should have investment in both the plans to reap the benefits. Also in PPF , we can extend by 5 years, say at age 45 we extend it by 5 years, then the percentage will be more than nps. For the lesser corpus we have to wait additional 10 years to reach the age of 60 via Nps. It all depends on what age we are investing. Thanks
You are wrong.. it is clearly explained in the video that if u start investing in ppf and NPS at the same age and for the same time period then 60% of final NPS corpus would be greater than 100% of final ppf corpus.
It all depends upon how much you are investing..you may not live till 60 to enjoy the benefits of nps ..but at least we can assume that one will survive for the next 15 years.
Guy : Gives clear section number that can be googled to find that NPS gives additional 50k tax exemption outside of 80c Reply : hehe Noob 😂😂 Slow claps for you brother! 👏
Thank you so much. A big fan of your videos right from ET money days. We need a complete video on EPF - mainly withdrawals during retirement, can we withdraw the eps component completely instead of having it as monthly pension? Lot of questions arises on how EPF works when you reach the retirement age. I know you have spoken about this on ET money but we need still more clarity on how we can use EPF during retirement.
I have started NPS 4 years back and now since last 2yrs i moved it to corporate NPS contributing 10k/month which is 1.2L taxfree and additional 50K under 80CCD that is also tax free, and it giving me 12-14% every year, it is a good product, by the way my first two investment years my returns were negative, so long run and SIP model only works in NPS according to me.
Thanks for the shorts. I too have the same apprehension as your friend. If this is the only difference in PPF and NPS then why not keep the same amount in MF instead of NPS. In that way you get the benefit of equity and debt and if required even the tax benefits( if you want) while depositing. And you get a post tax return which is more than the NPS. You also get autonomy to do whatever you want with your money.
There are a few differences between MF and NPS. Listing the imp. ones: 1. Taxation - the NPS accumulation (60% withdrawal) is tax-free while you have to pay capital gain tax when withdrawing from MFs 2. Asset allocation - to move money from equity to G-sec in an NPS does not attract capital gain tax while such rebalancing in MFs requires you to pay taxes and exit load (where applicable) 3. Tax benefits - you can claim upto 2 lakhs in deduction via NPS but such as option under mutual funds is only with ELSS and upto 1.5 lakhs
@@shankarnath Thanks for the clarification. Can you please share what options do we have with the rest 40 %. These aspects have kept me away from NPS. It looks I am misinformed.
You have to deploy that 40% into annuities. An annuity is what we Indians call as pension i.e. monthly amounts. It's very popular in the West and a very handy product as it locks the returns and there is predictability in monthly income. Pls check life insurance company websites for annuity options. There are a bunch of them
Please create same comparison of nps with mutual fund considering tax benefits (30% tax bracket) with nps (80ccd 1b and additional 10% employer contributions)
Great video as usual sir . Just to add ppf is even lower than 8% and nps should easily give more than 10% over long term if aggressive choice is selected
Thank you sir. Can you please share your thoughts on NPS just like you did with PPF video. There is lot of videos which reads the brochure, i am looking for understanding the product from an average person and it's impacts and benefits like you described above which no one talks about.
I invest only 50K in NPS to get tax exemption unde 80ccd. So, my saving on tax is 15000. Considering tax benefit i get return of 42.86% as soon as i invest.
So at 45, say if u can't pay 50000 per year to nps, can he pay 10000 in that case? BTW, what plan in nps u invested? I mean the fund? Pls elaborate..I am also planning to reduce my tax
@@vijayendranvijay4538as i am working in nps, my suggestion would be that you should invest in 3 diff PFM, each one for equity, bonds & security. Max pfm is giving good returns of around 12% in equity and around 10% in corporate bonds
Thank you for this. Gives us good perspective. Just a couple of clarifications , are returns on NPS tax free? Or is the 10 % that you assumed for NPS a post tax return ?
The corpus accumulated via NPS is tax-free (EEE provision applies). The 60% withdrawal is also tax-free. It's the 40% of that corpus that needs to go into annuity, that's where tax is payable (if applicable) but if you recall from my PPF video, if an investor plays it smartly he/she can keep the tax to a minimum. A little planning is needed.
Sir, can you do a video on how to rebalance portfolio in NPS to maximize fund returns & which fund manager to choose ? I have currently selected 75% Equity & 25 % G-bonds with HDFC as fund manager. Is this choice right for the current market conditions or should i move it fully to G bonds as the inflation is coming down ? Thank you
@@debajanisarma1673 Hi, not for the purpose of NPS if you haven't crossed 15 years. Pls watch my video on PPF, it has some more scenarios that can help you. ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Ku59xjAtWZw.html
Masterstroke!! What a great short video.. Sir!! could you please also make detailed video on taxation invovled in NPS. Returns of NPS incl taxation.For eg there is a cap of 7.5 lacs on EPF + NPS contributions. Also, best option to open NPS account. Thank you :)
Index will give better returns, but you can withdraw anytime. When you're emotionally weak, it's possible you may withdraw from index but you can't from NPS.
guys remember NPS provide tax deduction under 80ccd, that is whole reason to invest in nps. the comparison in the yt short makes sense. for retirement, focus on mid cap and small cap mutual funds ( or balanced advantage funds)
I wont suggest both as these are highly illiquid.. Do your monthly investment in an index fund. You will get better returns and highly liquidated when in need
Oh, that's bad luck. Although a bit of it depends on allocation % .. here's data .. in the last 5 years: Scheme G (G-Sec) funds have delivered 9.3% p.a. Scheme C (Corporate Bonds) funds have delivered 8.4% p.a. Scheme E (Equity) funds have delivered 12.2% p.a. My friend has a 30 year runway so he's put in as much as possible into equity and is reaping a return of almost 11%
@@shankarnath Unfortunately Government Employees can't change scheme preference. I started on Dec 2012, and presently as per the NPS portal, my XIRR is 8.62%, while my return on this FY is quite impressive at 23.32%. I feel one must invest in both PPF and NPS, which will be a much-balanced approach.
@@shankarnathActually it's better to consider a conservative 8% on NPS in the long term. Because as India become a developed nation growth will surely saturate
PFRDA is planning to do away with the mandatory 40% annuity rule and instead provide the option for SWP from the existing fund. A very welcome move imo. What's your view Shanker sir?
Glad you found it useful. Yes, we take NPS so that it acts as retirement income (via pension) and a lumpsum withdrawal should be incidental. However, its good to have option and I think the PFRDA is working on offering an SWP withdrawal option in addition to annuities.
Thank you Shankar sir for this explanation ! I have seen PPF calculator but they all ask for monthly investment. How much I can expect if I invest 1.5 lakh between 1st and 5th April of every year for 15 years ?
Hi, you can calculate this on an excel sheet. Pls do a google search for the same. But remember, you'll have to assume an interest rate number --- this is not a constant number like an FD.
Hello Niranjan ji. There's a minimum contribution one needs to make every financial year, pls invest that much atleast. The rest is flexible, you can read more about it on the Internet
Very useful Info Sir.! Thanks .. I have a question on VPF, Just help me to understand whether Money Invested in VPF is tax exempted completely over and above 80C limit ? For Example: I am under 30% tax slab and my 80C limit is over utilized by EPF and ELSS, apart from EPF I am contribution 1Lakh Extra as VPF. Now this 1laks is exempted from my salary TDS (30%) ? I am assuming this 1Lakh will debited before tax calculation. Or this 1Lakh will be debited post tax/TDS calculation and I need to pay 30% tax on this amount before it goes to VPF ? Please do clarify.
Question about selecting multiple fund managers in NPS. Is this officially allowed now? Is there any circular saying that we can now select different fund managers for different asset classes? Looks like NSDL is offering this option but not K Fintech.
Hi. No, these are back-of-envelop calculations. A 60-second video doesn't allow much room for T&C, there's barely time to put across a single idea. Also, the expense ratio for NPS is 0.09% at max.
One counter argument Sir, the fund will outperform over only prolonged time periods like 30 years. But money invested fir less than 20 years will return more with the PPF than the NPS. Given that NPS monthly payout after retirement will only give an IRR of around 4-5% given the current status. While PPF fund we can still invest in equity to get an IRR of 8-9% after taxation. Also, equity component in NPS is limited after 50 yrs. so the IRR won't be 10% thereafter, it will just be little over the PPF returns.
Yes, an index fund can be a strong retirement tool. NPS is more hybrid (equity + debt) and PPF is all debt. So different people might have different priorities. Plus there is the taxation angle which might appeal to some.
NPS is a good product ,the only problem with it is that it has a lockin period until 60. I am not sure if employees working in private sector will be having job till then .
You are actually making it sound very simple. PPF interest rate is a particular number set by Govt. Even if it is set to 0, you will have the accumulated corpus after maturity. However, NPS is market linked and there is no guarantee of 10% as you are claiming. What if the markets are really down when I retire? Now a days equity is not also giving the same ROI as it was 10 years back. Hence, what is the guarantee that the growth will be 10% and not 6%?
Thanks for sharing this perspective. Curious to know -- if a 40 year old friend/cousin asks you "hey, I want to put money in NPS. I know it's in the future and returns are market linked, what should I assume as returns over the next 20 years?". Are you more likely to say negative, 0%, 10% or 20%?
@@shankarnath being optimistic is good...but in nps your money stuck and can withdraw a few percentage as lumpsump and for remaining you have to purchase annuity scheme from any insurance company...and get full balance till 80 years of age
@@shankarnath The NPS corpus, which the subscriber can use for buying an annuity or for drawing pensions, is taxable when the schemes mature. 60% of the investment in the NPS is taxed by the Government of India, while 40% escapes taxation
@@shankarnath The National Pension System (NPS) has a lock-in period and imposes restrictions on withdrawals from the pension account. Subscribers are not allowed to make any withdrawals before reaching the age of 60. However, after 10 years from the account opening date, the subscriber is permitted to make the first withdrawal. A maximum of three withdrawals are allowed until the subscriber reaches the age of 60. It is important to note that the amount withdrawn cannot exceed the total sum of contributions made by the subscriber to the pension account.
ELSS significance has gone down a bit now, Narendra .. with the newer tax rules. Plus its not really a retirement instrument, it's more of a tax-saving instrument
adding to that u can also opt for corporate nps 6% of basic salary which is deducted directly from salary. Can invest around 80kish or more on nps per year to save tax
From the material I've studied - the aggregate limit is 1.5 lakhs. I have a video on PPF (ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Ku59xjAtWZw.html) where this is covered. Pls check with your PPF office for more details or latest updates
@@shankarnath I have watched the your video sir. I want to know that sir I have already invested 1.5lakh in financial year. This financial year I want open minor PPF account for my child. When opening account the so I have to deposit 500 rupees to open PPF account. So it will accept or not?
