Proper financial management is all about being punctual and investing in the right way. This will help you to maintain a financial portfolio that meets your financial goals. It is important to remember the importance of investing, especially in the difficult times since the pandemic.
NPS and mutual funds are the two most popular investment options in today’s age. This article will compare the pros and cons of each scheme and help you decide which one is best.
NPS can also be called National Pension Scheme. This national investment system was launched in India in 2004. It has been made accessible to all working professionals in India by 2009. This scheme is open to any Indian legal working professional between the ages of 18 and 60.
NPS is a long-term strategy to secure your retirement future. NPS investment allows you to make a regular contribution to a dedicated retirement account. After retirement, a portion of the total accumulation can also be used to purchase annuities to further secure your income.
The Advantages of NPS
NPS has many major benefits.
- NPS is subject to EET. This means that tax-free contributions are made and withdrawals are taxed. Additionally, the accumulation that is used to purchase annuities remains tax-free.
- After the mandatory Tier I account has been opened, the voluntary Tier II accounts require a minimum contribution in INR 1000. This can then be withdrawn completely.
- Possibility of long-term investments, which can secure long-term goals
- NPS withdrawal at maturity is tax-free up until 40% of the total accumulated amount after 2016.
- NPS investors can enjoy tax benefits of up to INR 1.5 Lakh, plus an additional INR 50000
The NPS Calculator online tool illustrates the expected lump sum amount and pension of an NPS subscriber upon maturity. It is dependent on many factors such as the monthly amount of regular contributions, corpus percentage reinvested to purchase annuity, estimated rates for investment returns, and the type of annuity selected.
To get the results, you will need to enter your date of birth, your monthly contribution, total contributing year, expected investment return and percentage of annuity sale.
What is mutual fund?
Mutual funds are created by pooling large amounts of money from many investors who share a common investment goal. The money is invested in shares, bonds, equities and each investor keeps a unit representing their individual holding. Depending on market conditions, the profit is automatically divided among investors.
Mutual fund investments are broadly divided into two types: lump sum and SIP. Like the name implies, lump sum investments can only be made once. Market conditions will determine the returns you receive. SIPs can be described as recurring deposits. They are consistent, regular deposits that you make for a set period of time. This investment method is relatively safer, given the benefits of rupee cost average.
There are three types:
- Equity funds,ensure higher returns, especially over the long-term
- Equity mutual fund investments are less risky than those made with equity funds. They also offer a fixed maturity rate, which increases security and reduces potential risk factors.
- Balanced mutual funds, let you enjoy both equity and debt mutual funds.
Benefits of mutual funds
One of the greatest advantages of mutual funds is:
- Except for ELSS mutual funds, there is no lock-in period for mutual funds. Investors can withdraw at any time.
- SIP is a secure investment option
- The majority of mutual funds offer high liquidity and are open-ended.
- Mutual funds offer greater flexibility, making it easier to enter and exit at any time.
- You can choose from a variety of investment plans depending on your term-based financial goals
- ELSS provides tax benefits for investments of up to INR 1.5 Lakhs as per the provisions u/s. 80C of the IT Act
Mutual funds calculator
An mutual funds calculator online tool that estimates your return on mutual fund investments is a . The mutual fund calculator will automatically reveal the results after you have entered the required details such as your investment amount, anticipated return rate, and duration. These details will help you to plan your financial portfolio and financial goals.