If you are also thinking of raising funds for retirement or you want to get more profit in the form of pension, then here you can invest in National Pension System (NPS). It can meet the needs of senior citizens.
Retirement fund gives great relief to the people. When you do not have any source of income, you can use retirement funds. If you are also thinking of raising funds for retirement or you want to get more profit in the form of pension, then here you can invest in National Pension System (NPS). To meet the requirements of a senior citizen, an investor in an NPS plan is obliged to buy an annuity valued at least 40 percent of the maturity amount, while a maximum withdrawal of 60 percent can be made.
Experts point out that NPS gives both equity and debt exposure in a single investment. The interest rate in NCP is not fixed, it depends on the debt-equity ratio chosen by the account holder. The NPS scheme allows an investor to choose an equity exposure of up to 75 per cent but the ideal equity debt ratio is considered to be 60:40. NPS account holders are advised to keep the annuity exposure at 40 per cent as it gives an annual return of around 6 per cent to the investor.
NPS interest rate
If an investor chooses to have 60 per cent exposure in equity and 40 per cent in debt, he is given around 12 per cent return from equity and 8 per cent from debt exposure. In such a situation, the equity investment of the NPS account holder will give a return of about 7.20 percent while the debt exposure will give a return of 3.20 percent. Due to which about 10 percent annual NPS return will be achieved.
How to get a pension of 1.5 lakhs
If an investor invests Rs 10,000 per month in NPS account for 30 years and buys an annuity 40 percent of the maturity amount, then according to the NPS calculator, the withdrawal amount will be Rs 75,952 and the monthly pension will be Rs 45,587. If the investor uses his NPS withdrawal money 1,36,75,952 then the monthly pension of Rs 45,587 can go up to around Rs 1.50 lakh.
The total amount to be invested Investing in
SWP (Systematic Withdrawal Plan) will give at least 8 percent annual return. So if NPS account holders invest 1.36 crores in SWP for 25 years, they can get additional monthly pension of Rs 1.03 lakhs for the next 25 years. In that case, his monthly pension would increase from around Rs 46,000 to around Rs 1.50 lakh.
