National Pension Scheme (NPS) – Why it is not a good Investment Option?
The Government of India rolled out the National Pension Scheme (NPS) for all the citizens of India from May 1, 2009 and for corporate sector from December, 2011.
Any individual whether employed with private sector, self employed or professional can avail of pension benefits and plan his or her retirement by enrolling in this scheme.
The person (employee/citizen) who joins the NPS will be known as “Subscriber” in the NPS. Under the NPS, each Subscriber will open an account with Central Record keeping Agency (CRA). This account is identified through unique Permanent Retirement Account Number (PRAN).
The Centre made NPS scheme mandatory for all the employees who joined the service on or after January 1, 2004. It has since been adopted by most state governments also. Currently, NPS has more than 1.13 Crore subscribers with total Asset under Management (AUM) of more than Rs. 1.09 lakh crore.
Most of my blog readers have chosen NPS for two main reasons – i) for tax saving purpose & ii) No other choice than to invest as contribution to NPS has been made mandatory for the Govt employees.
Unfortunately, majority of the subscribers are not aware of ‘how NPS scheme works’ and invest in it just to save some taxes. Most of us are eager to know about the tax benefits that are being offered while contributing to NPS but are not worried about the applicable taxes at maturity.
In this post, let’s understand – Is NPS a good investment option? What are the drawbacks of National Pension Scheme?
National Pension Scheme – Why NPS is not a good Investment?
A long-term investment option for your retirement planning should ideally have below features;
It should be simple and easy to understand
Should be flexible
Should have high liquidity
Should be a tax efficient product and ideally should fall under Exempt – Exempt – Exempt category.
You should be able to withdraw the whole corpus at the time of retirement and you should be allowed to re-invest the corpus as per your choice/requirements.
Retirement planning is a long-term goal, so when we are investing for a longer period, I prefer to invest in a simple, flexible, easy to understand, tax efficient & highly liquid investment option.
According to me, National Pension Scheme is not a great investment option for your retirement goal. It does not meet any of the above criteria. Let’s understand why it is not a good choice;
Lock-in Period : National Pension Scheme has a high lock-in period. The retirement age is fixed at 60 years. You can not withdraw the entire corpus till your reach 60 years of age. If you look at other tax saving investment options like PPF, ELSS, EPF, NSC etc., then they all have low lock-in period. PPF has a 15 year lock-in period, 3 year lock-in period for an ELSS fund, you can withdraw EPF if you are unemployed for 2 months and so on.
Pre-mature withdrawal : Up to 10 years, no partial withdrawals are allowed. Partial withdrawal up to 25% of own contribution (excluding contribution from the employer)only is allowed after 10 years for defined expenses. In the latest rule change, PFRDA (Pension Fund Regulatory And Development Authority) has relaxed the withdrawal norms to the effect that now the subscribers can withdraw upto 25% of contributions starting from the third year of opening of NPS (National Pension System) account. These revised NPS Partial Withdrawal rules are effective from January 10, 2018.
These defined expenses are for higher education, medical treatment & construction of house. There are certain other restrictions as well for making partial withdrawals.
Withdrawal at maturity : After attaining 60 years of age, you are allowed to withdraw only 60% of the total Corpus amount.
Annuity Plan:
At least 40% of the accumulated wealth in the NPS account needs to be utilized for purchase of annuity/pension plan when you turn 60 years.
Let’s understand this with an example : If your total corpus is Rs 100 at the time of retirement (60 years), you can withdraw Rs 60 as a lump-sum amount and Rs 40 (minimum) has to be used to buy an Annuity plan from a Life insurance company. Out of the sixty rupees, Rs 20 will be taxable as per your income tax slab at the time of retirement
(Latest update: Dec 2018 – W.e.f 1st April, 2019, this Rs 20 would also be tax-exempt) and the Rs 40 is tax-free amount. From FY 2018-19, this partial tax-exemption on NPS withdrawal is now extended to self-employed individuals also .
Kindly note that the taxes are applicable on the corpus amount and not just on the Gains. (The minimum quantum of investment in Annuity product depends on WHEN you choose to exit from the NPS account).
If you invest Rs 40 (lump sum) in an Annuity plan offered by a life insurance company, they in-turn will give you pension/annuity at periodic intervals. Unfortunately, even this annuity income or pension income is taxable as per the current laws.
Annuity income is taxable under the head ‘income from other sources’. Why do you want to receive an income which is chargeable to tax during your ‘retirement age’?
NPs falls under EET Category: The contributions made during the accumulation phase are exempt from income taxes, the returns earned during the accumulation phase are exempted but at maturity the corpus amount (60%) is subject to taxes. Latest Update(Dec 2018) : This 60% withdrawable corpus is made tax-exempt w.e.f. April, 2019. So, we can consider NPS under EEE category. But, do note that Annuity income earned is still a taxable income.
The contribution to Tier-I account of NPS is only eligible for tax benefits.
Latest Update(Dec 2018) : Contribution by government employees (only) under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs 1.5 lakh for the purpose of income tax provided there is a three-year lock-in period. This is w.e.f April, 2019.
Low Annuity rates :
The annuity rates offered by the life insurance companies are pretty low. Kindly remember that the pension amount is dependent on the annuity rates.
What is annuity rate? – In return for a lump sum; the money you have saved in your pension pot, an annuity provider (insurance company) will give you an annual income for the rest of your life.
The yields on annuity products offered in the market today are in the range of 5 to 7% only. This is low when compared to other conservative products like Debt mutual funds, Senior citizens Savings Schemes, Post office MIS, orMF MIP Schemesetc.,
So, low annuity rates (pension rates) may not beatinflation.
I personally believe that it is like you accumulate wealth and lose all the wealth to Annuity Plan Provider.
Types of Funds & Allocation :
NPS Scheme has three different types of Funds – i) Equity fund, ii) Corporate Bonds & iii) Government Securities. Under Equity Fund option, subscriber is allowed to invest only up to 50% of contribution amount. When you are investing for longer period, why should you restrict your equity exposure to just 50%? In case of Govt employees, the total equity portion of the tier I account cannot be more than 15% (increased up to 50% w.e.f. April, 2019). Government employees also do not have the option to change the contributions made to each fund.
Latest Update (29-Nov-2016): The existing ‘Life Cycle Fund’ with 50% max equity exposure is renamed as ‘Moderate Life Cycle Fund’. The new allocation option would be ; 50% equity exposure till the age of 35 and reduces it by 2% every year till the age of 55. A new fund option called ‘Aggressive Life Cycle Fund (LC-75)’ has been introduced. The fund invests 75% in equities till age of 35 and then cut exposure by 4% every year. The cuts will slow down to 3% per year between 45-50 years and to 1% per year between 50 and 55 years.
Latest update(04-March-2017):With effective from 1st April 2017, NPS subscribers can change their investment option and asset allocation ratio ‘twice’ in a year than the existing once in a year.
Equity funds Investment Strategy : Till last year (2015), equity funds of NPS were mirroring the returns of the index because pension funds were supposed to invest in index stocks (Large Cap Stocks) only. But from September 2015, fund managers (SBI/ICICI/UTI/LIC/HDFC/Kotak/Reliance)have been allowed to invest in a larger universe of stocks and follow an active investment strategy that does not mirror the index. But, most the fund managers are yet to follow or implement these new guidelines. Most of the funds do not even have more than 10% of their equity corpus allocated to non-nifty stocks (mid-cap stocks).
If it is mandatory for you to contribute to NPS then you do not have any choice but to contribute. If you want to make voluntary contributions then I believe that NPS is not a great investment avenue. (Read: List of Best Investment Options)
If maturity proceeds are not taxed, and if buying an annuity product is made optional then National Pension Scheme can be a better option. But as of now, it is a complex and less tax-efficient long-term investment option.
Do you prefer NPS to other investment options like Mutual funds? Kindly share your views on NPS.
(Image courtesy of Mister GC at FreeDigitalPhotos.net) (Post published on : 22-July-2016)
This post was last modified on October 4, 2023 9:52 am
Sreekanth Reddy
Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 14 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. The information provided, therefore, should not be viewed as financial, legal, accounting, tax or investment advice."
Hi Sreekanth,
I am 35 & I have exhausted my 80C limit through Employee PF,School fees,sukanya etc.
I have 15k monthy SIP in good equity MFs , & for debt portion I was investing approx 3k p.m. in PPF which will now offer 7.9% only
Can i invest in NPS instead of PPF for debt portion of my portfolio , it will also help me save tax as I am in 20% bracket?
Thanks
Manish
Dear Manish,
I believe you might have gone through the above article.
With the given product structure, personally I will not put my money in NPS product, though it offers additional tax saving of up to Rs50k.
Read: List of best investment options!
My Self Vijay, my age is 40 , from march-2017 i have started investing in NPS. I am planning to invest Rs. 5000/ month.
Am i doing this correct ??
Please help ..
Vijay
Dear vijay ..As mentioned in the above article, NPS is not a great choice based on current product structure & taxation rules.
Personally, I prefer not to invest in NPS.
Very nice article Sreekanth.
I need some guidance with my financial planning:
I have divided my financial planning in three time parts short (3 years), mid (8 years), long (retirement).
And I am doing investment in PPF, VPF, ELSS.
So my doubt is:
1. all the investment done in ELSS, can it be considered for long term planning or not. If not do I have to plan all three time horizons separately than my tax savings investments.
2. Balanced-Large Cap-Mid Cap which of these is best for mid term planning ? keeping my 35% investment in Debt, so i want to know where to put rest 65% amount.
Thanks in advance.
Dear sadhli,
1 - Yes, can be considered for Long term goal(s).
2 - Large & balanced funds can be considered.
Thanks Sreekanth.
I have done my asset allocation as below:
a. Retirement: ELSS (Axis Long Term) 70%, VPF 30%
b. Long Term (10+ years): Large Cap (ICICI Focused Bluechip) 40%, Mid Cap (HDFC Mid Cap) 30%, Debt (UTI Dynamic)30%
c. Mid Term (6-9 years): Balanced Fund (HDFC Balanced) 70%, Debt (Birla Sun Life Short Term Fund) 30%
d. Short Term (4 years): Debt Fund (Birla Sun Life Floating Rate Fund) 100%
1. Could you please review and let me know if any fund needs to be replaced by other or need to be added/removed.
2. Is it advisable to invest in Dynamic funds in lump-sum instead SIP ?
Dear Sadhli,
You may kindly go ahead with your investment plan.
Do note that you may have to re-balance your portfolio and move to safer investment avenues (if required), as your goal year nears.
2 - There is no right or wrong answer.
Understood.
As you mentioned to move to safer avenues, like moving to debt from equity, is it possible for you to suggest how that can be planned as I am completely a newbie in this field so would need guidance
Dear Sadhli,
Let's say your target goal year is 10 years from now.
Either you can maintain a desired Equity to Debt ratio from beginning and re-balance the portfolio to maintain fixed Debt to Equity ratio.
(or)
You may invest in Equity 100% and lets say after 7 years from now, for the next 3 years you can gradually redeem the equity fund units and mover to other safe avenues (relatively) like Fixed deposits, debt funds, etc. so that the capital appreciation is protected.
But over these 7 years, you have to continuously monitor your Portfolio value so that you can ensure that expected goal value can be achieved in 10 year period.
Thanks Again Sreekanth.
I prefer your first suggestion to keep the Equity - Debt ratio throughout by rebalancing.
But here too I have concerns (apologies for so many questions as I want to learn this financial planning myself so have many doubts)
1. For long term goal - If my debt portion is PPF (my PPF will mature in 6 years as its been 9 years with me so far). And we can't pull out money from it then how can rebalancing be done ? only one way from Equity to Debt ? But then the existing PPF amount will also contribute to the Debt gain in one FY. Then how it can be done ?
2. If not PPF then which Debt fund is safer for 10+ time window. As I am not sure Dynamic bonds are less riskier than Short Term Debt funds.
3. Are short term debt funds a good option for 7+ and 10+ window or any other less risky Debt Funds can be looked upon.
Dear sadhli,
1 - You may withdraw PPF amount after 6 years from now and re-invest in other debt products depending on the goal target year. Else, you may extend PPF by 5 more years, again depending on when you require this corpus money.
2 & 3- For long-term horizon, Dynamic bonds can be a better choice. Yes, they do come with certain amount of risks. PPF is a better choice, if stable returns are of high priority.
Hi Sreekanth,
I am in 30% tax bracket with close to 35L base salary. I exhaust my 80C with PPF. Now if I take NPS, I can not only deduct 50K with 80CCD(1B) but also 10% of my base with 80CCD(2) through employer contribution. So, I can save 30% tax on almost 4L income...a cool tax saving of 1.2L. So NPS sounds pretty attractive to me....
What am I missing?
Thanks,
A
Dear Amit,
Kindly go through the article.
I prefer to invest in a product which is easy to understand and have greater flexibility.
Tax saving should not be the sole criteria when choosing a long-term savings product.
Of-course, NPS may be made more tax-efficient and flexible in near future :) ..
Hi Shree,
You mentioned that equity mutual funds are taxable in the beginning , but as per my knowledge if this MF's is held for more than 1 year they are completely tax free. So just wanted to clarify are equity MF taxable?
Dear Tejal,
Are you referring to any particular sentence in the above article, plz let me know..will correct it..
Yes, Long term capital gains on Equity funds (12 months + holding period) are tax-exempt.
i dont completely agree with you regarding NPS. When planning for retiremnet is a long term goal, then why a need for a high liquidity? a reasonable amount of liquidity is offered after 10 years even in NPS for real emergencies if they arise.. and it is not mandatory to withdraw 60% as lumpsum, please highlight that as well..
also i request if u could provide a comparison of NPS with universal pension schemes available in mature economies like US, UK , Switzerland, Australia, Canada.. which have well established pension funds active..
Dear Adarsha,
Thank you for sharing your views.
But my point is simple, given a choice I would prefer an investment option which has high liquidity, easy to understand (do not want to refer to rules book), tax efficient, have more flexibility (investment allocation choices) etc.,
Hi Shrikath,
I am Rashmi here, I usually visit your blogs for clarifying my doubts. Thanks for your effort and keep educate us on financial front.
I am working in corporate company earning 10lks/anm and my kids are dependent on me . I have planned for 80C and 80D and i have Housing loan paying EMI of 20k per month. I was searching for good pension schemes or pension funds which are tax free after investing for certain years.
Its very good article from you on NPS. and Going through your blog on NPS, i felt its not worth investing and need to pay tax even after 60 years especially annuities are taxable.
I would appreciate you if you could advice me an alternative solution for this.
1. I want to build a corpus fund which would yield good monthly income after 20 -25 years from now on wards
Thank you Sreekanth,
I will go through the links shared by you.
Thank you once again .
Hi Shrikanth,
My father is a govt employee and has crossed his 80C limit And 80D he has health insurance too . He is 55 yrs old , now he is entitled to 20℅ tax slab and paying around 80-90K in tax. Since his 80C limit is already crossed And 80D also taken. Do we have any other way to do better tax planning than investing in NPS or NPS seems to be good option for him? He isn't willing to invest in risk related investments. Otherwise I would ask him to invest in Balanced funds !! His ultimate aim is to reduce tax and shud safeguard the corpus amount :) .. can you tell me is NPS good for him as he s having another 5 yrs if service or any other tax saving option will suit his needs?
I have read this article there are these things that struck me very badly.
1) Predicting one's life is very very difficult in this 21 century.
2) Waiting for 60 years is too long period.
3) Again buy a Annuity plan is simply stupid idea because 60+ is time to stay at home with all the health problems (these days common) and you wait for a company to pay you monthly money, some amount that too is taxable, a big nonsense.
Dear karthik..Agree with your views :)
There is one unseen consequences regarding NPS
4 to 5 years everbody were saying NPS is bad, but now with 50K tag its becoming little attractive.
What if the govt makes NPS attractive at later stage over the years, then one could feel he should have started earlier .
Should I test the waters with minimum amount.
Dear karthik,
Personally, I prefer to invest in products which are transparent, tax efficient, have high liquidity and give me control on my portfolio. If the rules are pretty clear in mutual funds why would I like to invest in NPS where product is complex and not tax efficient AS OF NOW...
Hi Sreekanth, I felt good after reading few articles, since I don't have the knowledge of SIP. I am CG employee, and earning Rs 53,000 on hand. I plan to buy a apartment (first house) worth Rs 35 L with housing loan for 30L with 30 years and EMI 25 K. Shall I go ahead with purchase or better to invest the same in SIP. Please suggest me.
Dear Vijayakumar ..May I know your financial goals? Do you have dependents / any financial obligations?
View Comments
Hi Sreekanth,
I am 35 & I have exhausted my 80C limit through Employee PF,School fees,sukanya etc.
I have 15k monthy SIP in good equity MFs , & for debt portion I was investing approx 3k p.m. in PPF which will now offer 7.9% only
Can i invest in NPS instead of PPF for debt portion of my portfolio , it will also help me save tax as I am in 20% bracket?
Thanks
Manish
Dear Manish,
I believe you might have gone through the above article.
With the given product structure, personally I will not put my money in NPS product, though it offers additional tax saving of up to Rs50k.
Read: List of best investment options!
My Self Vijay, my age is 40 , from march-2017 i have started investing in NPS. I am planning to invest Rs. 5000/ month.
Am i doing this correct ??
Please help ..
Vijay
Dear vijay ..As mentioned in the above article, NPS is not a great choice based on current product structure & taxation rules.
Personally, I prefer not to invest in NPS.
Very nice article Sreekanth.
I need some guidance with my financial planning:
I have divided my financial planning in three time parts short (3 years), mid (8 years), long (retirement).
And I am doing investment in PPF, VPF, ELSS.
So my doubt is:
1. all the investment done in ELSS, can it be considered for long term planning or not. If not do I have to plan all three time horizons separately than my tax savings investments.
2. Balanced-Large Cap-Mid Cap which of these is best for mid term planning ? keeping my 35% investment in Debt, so i want to know where to put rest 65% amount.
Thanks in advance.
Dear sadhli,
1 - Yes, can be considered for Long term goal(s).
2 - Large & balanced funds can be considered.
Thanks Sreekanth.
I have done my asset allocation as below:
a. Retirement: ELSS (Axis Long Term) 70%, VPF 30%
b. Long Term (10+ years): Large Cap (ICICI Focused Bluechip) 40%, Mid Cap (HDFC Mid Cap) 30%, Debt (UTI Dynamic)30%
c. Mid Term (6-9 years): Balanced Fund (HDFC Balanced) 70%, Debt (Birla Sun Life Short Term Fund) 30%
d. Short Term (4 years): Debt Fund (Birla Sun Life Floating Rate Fund) 100%
1. Could you please review and let me know if any fund needs to be replaced by other or need to be added/removed.
2. Is it advisable to invest in Dynamic funds in lump-sum instead SIP ?
Dear Sadhli,
You may kindly go ahead with your investment plan.
Do note that you may have to re-balance your portfolio and move to safer investment avenues (if required), as your goal year nears.
2 - There is no right or wrong answer.
Understood.
As you mentioned to move to safer avenues, like moving to debt from equity, is it possible for you to suggest how that can be planned as I am completely a newbie in this field so would need guidance
Dear Sadhli,
Let's say your target goal year is 10 years from now.
Either you can maintain a desired Equity to Debt ratio from beginning and re-balance the portfolio to maintain fixed Debt to Equity ratio.
(or)
You may invest in Equity 100% and lets say after 7 years from now, for the next 3 years you can gradually redeem the equity fund units and mover to other safe avenues (relatively) like Fixed deposits, debt funds, etc. so that the capital appreciation is protected.
But over these 7 years, you have to continuously monitor your Portfolio value so that you can ensure that expected goal value can be achieved in 10 year period.
Thanks Again Sreekanth.
I prefer your first suggestion to keep the Equity - Debt ratio throughout by rebalancing.
But here too I have concerns (apologies for so many questions as I want to learn this financial planning myself so have many doubts)
1. For long term goal - If my debt portion is PPF (my PPF will mature in 6 years as its been 9 years with me so far). And we can't pull out money from it then how can rebalancing be done ? only one way from Equity to Debt ? But then the existing PPF amount will also contribute to the Debt gain in one FY. Then how it can be done ?
2. If not PPF then which Debt fund is safer for 10+ time window. As I am not sure Dynamic bonds are less riskier than Short Term Debt funds.
3. Are short term debt funds a good option for 7+ and 10+ window or any other less risky Debt Funds can be looked upon.
Dear sadhli,
1 - You may withdraw PPF amount after 6 years from now and re-invest in other debt products depending on the goal target year. Else, you may extend PPF by 5 more years, again depending on when you require this corpus money.
2 & 3- For long-term horizon, Dynamic bonds can be a better choice. Yes, they do come with certain amount of risks. PPF is a better choice, if stable returns are of high priority.
Hi Sreekanth,
I am in 30% tax bracket with close to 35L base salary. I exhaust my 80C with PPF. Now if I take NPS, I can not only deduct 50K with 80CCD(1B) but also 10% of my base with 80CCD(2) through employer contribution. So, I can save 30% tax on almost 4L income...a cool tax saving of 1.2L. So NPS sounds pretty attractive to me....
What am I missing?
Thanks,
A
Dear Amit,
Kindly go through the article.
I prefer to invest in a product which is easy to understand and have greater flexibility.
Tax saving should not be the sole criteria when choosing a long-term savings product.
Of-course, NPS may be made more tax-efficient and flexible in near future :) ..
Hi Shree,
You mentioned that equity mutual funds are taxable in the beginning , but as per my knowledge if this MF's is held for more than 1 year they are completely tax free. So just wanted to clarify are equity MF taxable?
Dear Tejal,
Are you referring to any particular sentence in the above article, plz let me know..will correct it..
Yes, Long term capital gains on Equity funds (12 months + holding period) are tax-exempt.
i dont completely agree with you regarding NPS. When planning for retiremnet is a long term goal, then why a need for a high liquidity? a reasonable amount of liquidity is offered after 10 years even in NPS for real emergencies if they arise.. and it is not mandatory to withdraw 60% as lumpsum, please highlight that as well..
also i request if u could provide a comparison of NPS with universal pension schemes available in mature economies like US, UK , Switzerland, Australia, Canada.. which have well established pension funds active..
Dear Adarsha,
Thank you for sharing your views.
But my point is simple, given a choice I would prefer an investment option which has high liquidity, easy to understand (do not want to refer to rules book), tax efficient, have more flexibility (investment allocation choices) etc.,
Hi Shrikath,
I am Rashmi here, I usually visit your blogs for clarifying my doubts. Thanks for your effort and keep educate us on financial front.
I am working in corporate company earning 10lks/anm and my kids are dependent on me . I have planned for 80C and 80D and i have Housing loan paying EMI of 20k per month. I was searching for good pension schemes or pension funds which are tax free after investing for certain years.
Its very good article from you on NPS. and Going through your blog on NPS, i felt its not worth investing and need to pay tax even after 60 years especially annuities are taxable.
I would appreciate you if you could advice me an alternative solution for this.
1. I want to build a corpus fund which would yield good monthly income after 20 -25 years from now on wards
or any alternative which you could suggest.
Dear Rashmi Ji,
Given the current tax structure, NPS may note be a great investment avenue.
You may consider investing in 2 to 3 Equity oriented mutual funds for your Retirement goal.
Kindly read below articles:
Retirement goal planing & calculator.
Best Equity Funds 2017-18.
List of best investment options.
Thank you Sreekanth,
I will go through the links shared by you.
Thank you once again .
Hi Shrikanth,
My father is a govt employee and has crossed his 80C limit And 80D he has health insurance too . He is 55 yrs old , now he is entitled to 20℅ tax slab and paying around 80-90K in tax. Since his 80C limit is already crossed And 80D also taken. Do we have any other way to do better tax planning than investing in NPS or NPS seems to be good option for him? He isn't willing to invest in risk related investments. Otherwise I would ask him to invest in Balanced funds !! His ultimate aim is to reduce tax and shud safeguard the corpus amount :) .. can you tell me is NPS good for him as he s having another 5 yrs if service or any other tax saving option will suit his needs?
Dear Vicky,
You are right in having a different view point. (May be its better to THINK beyond taxes when investing!).
I have tried to list down the drawbacks of the scheme, do let him know about them especially 'annuities are taxable'.
Read:
List of investment options!
List of income tax deductions.
I have read this article there are these things that struck me very badly.
1) Predicting one's life is very very difficult in this 21 century.
2) Waiting for 60 years is too long period.
3) Again buy a Annuity plan is simply stupid idea because 60+ is time to stay at home with all the health problems (these days common) and you wait for a company to pay you monthly money, some amount that too is taxable, a big nonsense.
Dear karthik..Agree with your views :)
There is one unseen consequences regarding NPS
4 to 5 years everbody were saying NPS is bad, but now with 50K tag its becoming little attractive.
What if the govt makes NPS attractive at later stage over the years, then one could feel he should have started earlier .
Should I test the waters with minimum amount.
Dear karthik,
Personally, I prefer to invest in products which are transparent, tax efficient, have high liquidity and give me control on my portfolio. If the rules are pretty clear in mutual funds why would I like to invest in NPS where product is complex and not tax efficient AS OF NOW...
Hi Sreekanth, I felt good after reading few articles, since I don't have the knowledge of SIP. I am CG employee, and earning Rs 53,000 on hand. I plan to buy a apartment (first house) worth Rs 35 L with housing loan for 30L with 30 years and EMI 25 K. Shall I go ahead with purchase or better to invest the same in SIP. Please suggest me.
Dear Vijayakumar ..May I know your financial goals? Do you have dependents / any financial obligations?