Apart from the amount invested in NPS, correct strategy is also necessary for retirement.
NPS Calculator: In the case of returns, NPS is currently seen to be overshadowing PPF. In such a situation, if the investor has the ability to take a little risk, then NPS can become a better option for them. Retirement funds can be prepared in NPS with the right combination of risk and returns.
- January 27, 2021, 6:42 AM IST
These experts say that under NPS, investors get an option to choose the ratio of equity and debt investment. If investors want, they can also invest in 75% equity mode. However, usually most investors recommend investing in the ratio of 60: 40, given the risk factor and the possibility of better returns.
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How to expect 10 percent annual return If you look at the ratio of 60: 40, then you can expect a return of 12 percent on it in the long term. Whereas, flat 8% will be available in debt. On this basis, an investment of 60 percent in equity mode will give 7 percent return in 30 years. Whereas in debt mode it will be around 3 percent. Thus the total NPS return will be up to 10 percent.
Buy annuity with 40 percent balance
After this, when the investor reaches the age of retirement, he can withdraw 60 percent of some of his NPS balance. Annuity can be purchased from the remaining 40 percent balance. The amount of annuity can be received as pension. The returns received on this will determine the amount of pension. One can expect a return of about 6-7 per cent on this annuity.
Source: National Pension System Trust Website
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What is calculus?
If calculating according to this strategy, then lumpsum of Rs 41,02,786 can be collected with an investment of Rs 3 thousand per month for 30 years. With this, a pension of Rs 13,676 will also be available. Understand in simple language, if a person invests 100 rupees every day, then he can secure financial life to a great extent after retirement. The annuity in the above calculator has been taken at 40 per cent and the net return on it at 6 per cent annually.