Want to be a Crorepati by the time you retire? Well, if you have any such plan, then National Pension System (NPS) is something you should not miss out on.
If you are young, then definitely you should start planning for retirement from the initial days of your job.
Under NPS, investors can secure their retirement and can arrange monthly pension along with lump sum amount. By investing just Rs 74 a day in NPS, investors can get Rs 1 crore by the time they retire. NPS is a market-linked, retirement-oriented investment option.
NPS money is invested in Equity (share market and Debt), government bonds and corporate bonds. Investors have the option to decide how much of NPS money will go into equity at the time of account opening. Usually, up to 75% of the money can go into equity following which investors are likely to get slightly higher returns than PPF or EPF. For example,
if you are 20 years old and start investing in NPS by saving Rs 74 for the day; when you retire after 40 years, you will be a crorepati by investing just Rs 2,230 every month. Assuming a return at the rate of 9% total wealth of the investors will be around Rs 1 crore when they retire.
Suppose a 20 year-old invests Rs 2230 per month over investment period of 40 years with estimated return of 9%. After 40 years, the investor will receive Rs 92.40 lakh interest with Rs 10.7 lakh total investment. With this, the total pension wealth will be Rs 1.03 crore with Rs 3.21 lakh tax saving.
However, investors cannot withdraw all this money at once. They can withdraw only 60 percent of it and the remaining 40 percent they will have to put in an annuity plan, from which they will get pension every month.
Although it is a market linked product, it is possible that the returns may change.
Video Editor: Partha Narayan Das
Producer: Sanchita Mondal