PPF vs NPS: Where do you have to make investments for higher returns? Read what consultants say

Public Provident Fund (PPF) is a long-term funding instrument and people traders who’ve low threat urge for food, they like to this instrument for retirement fund accumulation. But, however National Pension System (NPS) is a risk-oriented retirement fund accumulation instrument and it’s market-linked. So, like PPF, NPS is just not a 100% risk-free funding instrument.

According to tax and funding consultants, PPF is a perfect place to park one’s cash if one’s threat urge for food is low. In the case of an investor who has little urge for food to take threat then NPS account is likely one of the most most popular funding instruments for them.

Major confusion between PPF vs NPS

Manikaran Singhal, founder at goodmoneying.com stated, “Both are voluntary contribution options and have different features. Both are long term investment options, where PPF is a fixed interest product, NPS has market linked features in it. Both can be used for 80C tax savings where as in NPS one can invest ₹50,000 more to save taxes under section 80CCD which is over and above section 80C limit of 1.50 lakh.” He stated that one may spend money on any of those or each of those. But investor ought to have larger threat urge for food and needs to be ready for longer lock in for NPS.

PPF vs fairness returns in contrast

On what traders ought to select between PPF and NPS, Kartik Jhaveri, supervisor — Wealth Management at Transcend Consultants stated, “Due to the equity exposure in NPS account, if an investor chooses the 50:50 option of the equity and the debt options, in the long-run debt option would give around 8% returns while the equity exposure would give at least 12% returns in the long-term. So, the net NPS interest rate in the long-term in this debt-equity ratio will be around 10%.”

So, at a time when PPF rate of interest is 7.1%, NPS rate of interest can be round 2.9% larger if the investor chooses 50:50 ratio within the debt and fairness NPS account.

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