Invest in PPF or NPS to avoid any problem in terms of money after retirement, this question bothers everyone. Let’s know the simple answer to this…
New Delhi: PPF vs NPS investment: People invest in Public Provident Fund (PPF) and National Pension System (NPS) to lead a good and comfortable life even after retirement. Both these methods are great for building a retirement fund. But there are some differences between these two, which are very important to understand before investing. So that it is easy to choose between PPF and NPS for investment.
Basic difference between PPF and NPS
The practice of investing in PPF is very old and any person can invest in it. At the same time, the National Pension Scheme (NPS) has been brought by the government for the purpose of developing the pension society. Share market share is high in NPS account. Due to being linked to the stock market, there is a possibility of getting higher returns in NPS. While a fixed interest is given by the government in PPF, but investment in it is completely safe.
Understand the mathematics of PPF like this
Talking about PPF, if a person deposits Rs 1.5 lakh or Rs 12,500 per month in it in a year. If he gets an interest of 7.1 percent during the period of investment, then according to the PPF calculator, after 30 years, the investor will get the maturity amount of Rs 1,54,50,911 i.e. about Rs 1.5 crore.
Such a case will remain in NPS
On the other hand, if a person deposits Rs 1.5 lakh annually or Rs 12,500 a month in the scheme of NPS and the annuity is kept at 40 percent. Then according to the NPS calculator, a person can withdraw Rs 1,70,94,940 from his account after retirement. Also, the remaining Rs 1,13,96,627 can be used to buy annuity. With this, he will continue to get a pension of Rs 56,983 every month.
Benefit of tax exemption
The investment made in Public Provident Fund is eligible for tax deduction under section 80C of Income Tax. On the other hand, the money received in PPF on completion of maturity limit is interest free. At the same time, to promote investment in NPS, an additional exemption of Rs 50,000 is available from the government under section 80CCD(1B), which is in addition to the exemption of Rs 1.5 lakh under section 80CCE.
According to experts regarding investment in PPF and NPS, then if you want to choose between these two, then the NPM scheme is better. But it is good to invest in both the schemes for a very secure future. People can opt for PPF for long term financial needs as it is tax saving. At the same time, NPS works like a wealth creation instrument.
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