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Home Personal Finance PPF or NPS which investment option is better for Retirement

PPF or NPS which investment option is better for Retirement

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PPF vs NPS: You have many investment options for retirement. Out of these, PPF, NPS are two such options, about which there is often confusion about which one will be more beneficial to invest in. Let us clear this confusion.


PPF vs NPS: Both Public Provident Fund (PPF) and National Pension System (NPS) are long-term investments. However, the objectives of both the investment options may be different. NPS is purely a retirement scheme. Investment is made in this so that the pension continues after the age of 60 years. To get pension through PPF, you have to keep it active even after maturity.

What is the difference between PPF and NPS

PPF is 100% debt instrument, i.e. its entire money is invested in bonds etc., whereas NPS has a share of both debt and equity. In NPS, the investor has the option that he can keep the equity share up to 75% in it. Experts say that if the investor has a high risk appetite, then he can keep the debt-equity ratio 50:50, this can give him a return of up to 10 percent in the long term, which is about 3 percent from the 7.1% of PPF. Percentage is high. In NPS, after maturity, a minimum of 40 percent is mandatorily put in the annuity, here by annuity, it means pension. From this you get pension after retirement.

Tax exemption is also available

You get the benefit of tax exemption on investment in both PPF and NPS. In both of these, income tax exemption is available on investment of Rs 1.5 lakh annually. There is no fixed maturity limit in NPS, whereas PPF matures in 15 years, so those who want to continue investing in PPF for a long period have to carry forward the investment for a period of 5-5 years every time. Is. That is, if someone wants to continue PPF for 30 or 35 years, then he can continue it in blocks of 5-5 years. Experts recommend that investors should opt for PPF extension as they get the benefit of compounding interest.

Let us now know which option between PPF and NPS gives you more benefit or amount on retirement. Suppose you are 30 years old, you want to invest for the next 30 years so that when you are 60 years old, you have a huge amount in your hands, so that your old age can be comfortably cut.

3000 rupees per month investment in PPF
age 30 years

Investment period 30 years

3000 rupees investment every month

Annual Return 7.1%
Total Investment 10.80 Lakh

Maturity Value 37.08 Lakh

If you put 3000 rupees in monthly PPF, that is, 36000 rupees for the year. If you continue this investment for 30 years, then at the current 7.1% interest rate, you will get Rs 37,08,219 after 30 years.

3000 rupees per month investment in NPS
age 30 years

Investment period 30 years

3000 rupees investment every month

Estimated Return 8.0%

Total investment 10.80 lakhs

Maturity Value 44.52 Lakh



If you put 40 percent of this maturity value in the annuity, that is, 17.81 lakhs you put in the annuity, then your lump sum amount will be 26.71 lakhs and monthly pension will be Rs 11,874. Here we have taken 8% expected return on annuity.

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