The two of the most popular investment schemes in the present age are mutual funds and NPS. The purpose of this article is to highlight the pros and cons of both these schemes and make a comparative study to determine which one is better suitable.
Table of Contents Toggle What is NPS?Advantages of NPSNPS calculatorWhat are mutual funds?Advantages of mutual fundsMutual fund calculatorA comparative study of NPS and mutual fundsConclusion
What is NPS?
The full form of NPS is National Pension Scheme. This is a national investment system launched by the Indian government back in 2004 and has been made available to all sorts of working professionals in the country by 2009. Any legal Indian working professional aged between 18 and 60 years is eligible for applying to this scheme. NPS is a long-term investment strategy for securing your future after retirement. NPS investment ensures a disciplined contribution to a dedicated pension account regularly and after retirement a section of the total accumulation can be withdrawn to buy annuities, further securing your post-retirement income.
Advantages of NPS
Some of the major benefits of NPS are
NPS calculator
The NPS calculator is an online digital tool for illustrating the tentative lump sum amount and pension as expected by an NPS subscriber on maturity. It depends on several factors like the amount of regular monthly contributions, corpus percentage reinvested for annuity purchase, and estimated rates in respect of investment returns and concerned annuity chosen. You need to enter your birth date, your monthly contribution, total contributing years, expected investment return, percentage of annuity purchase, and expected rate of annuity on the NPS calculator, to know the results.
What are mutual funds?
Mutual funds are formed by pooling a large amount of money from several investors with a common investment objective. This money is eventually invested in equities, bonds, shares, and every investor holds units, representing their individual holding. The profit gets automatically distributed among all the investors, depending on the current market condition. Mutual fund investments can be broadly classified into two categories- lump sum and SIP. As the name suggests, lump sum investments are single-time investments. You will receive returns depending on the market conditions. SIPs are like recurring deposits, implying you make consistent regular deposits of a fixed sum for a certain period. This is a comparatively safer mode of investment, considering the benefit of rupee cost averaging. There are three types of mutual funds:
Advantages of mutual funds
Some of the major advantages of mutual funds are:
Mutual fund calculator
A mutual fund calculator is an online digital tool which reveals your estimated return from mutual fund investment. As you enter the relevant details like your investment amount, duration, expected return rate, etc., the mutual fund calculator works automatically to reveal the result. Based on these, you can make better financial planning and portfolio.
A comparative study of NPS and mutual funds
Conclusion
From the above discussion, it is evident that both NPS and mutual funds are great ways for investment, each offering their individual pros and cons. Utilising the mutual fund calculator and NPS calculator you can make a better assessment, thus aiding your decision.
