EPF vs NPS vs MF- If every person does retirement planning on time in his life, then old age can pass comfortably without stress. For his financial security, every person must do retirement planning. For this, it is necessary to make a right investment strategy as soon as he enters working life, so that a big fund can be prepared by the time of retirement.

In today’s times, many means of investment and savings are available for any person, through which better retirement planning can be done. There are many solutions like NPS, EPF and mutual funds. Let us know where it would be better to invest.

How much will be the benefit of investing in EPF?

Employees’ Provident Fund (EPF) is a mandatory savings scheme applicable to organizations with 20 or more employees. Employee and employer contributions each month amount to 12% of the employee’s basic salary and DA. The government sets an annual interest rate, currently 8.25%. EPF is safe and tax-effective, as contributions, interest, and withdrawals are all tax-free.

However, EPF is less liquid and funds can only be withdrawn in situations such as job loss, home purchase, or medical emergencies. This scheme is suitable for low-risk salaried individuals who want stable and secure returns. Investments in EPF are eligible for tax exemptions up to Rs 1.5 lakh under Section 80C.

NPS

The National Pension System ( NPS) is a voluntary government-run scheme. Any Indian citizen between the ages of 18 and 70 can invest in this scheme. Even NRIs can invest. Investors can choose a mix of equities, corporate bonds, and government securities as per their preference. This scheme has consistently generated annual returns of 8% to 10%.

Although NPS funds cannot be withdrawn until the age of 60, the tax benefits are quite attractive. A deduction of ₹ 1.5 lakh is available under Section 80C of the Income Tax Act and an additional Rs 50,000 is available under Section 80CCD(1B) . The National Pension Scheme portal also advises investors to increase their investments over a period of time to increase their pension income.

Mutual Funds

In mutual funds, investors can decide themselves whether to invest in equity funds, debt funds, or hybrid funds. If you choose equity funds for the long term, you can get returns of up to 10–15% annually. Equity funds target high growth. Hybrid funds help in balancing growth and stability. Whereas, debt funds focus on safety. One can get tax exemption under Section 80C on investment up to Rs 1.5 lakh in Equity Linked Savings Schemes ( ELSS ). However, experts say that tax may be levied on redemption. You can also invest in mutual funds through SIP.

Where would it be better to invest?

Now, if you compare mutual fund SIP, NPS, and EPF, according to an estimate, SIP can provide market-based returns of 10% to 15%, but it also carries higher risk. NPS can provide balanced returns of 8% to 10% and the risk is moderate, whereas EPF provides a stable return of 8.25% and is the safest. In terms of liquidity, SIP is the best, NPS is limited, and EPF is the lowest. In terms of tax benefits, EPF and NPS are the best, whereas SIP provides exemption only on ELSS funds.

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