PPF vs NPS: Which will provide more money after 60? Understand the complete calculation

PPF vs NPS: Life becomes a little more difficult after retirement. If you’re considering a scheme to secure your future, the government operates several special schemes. PPF and NPS are particularly popular among the public. The amount invested in these schemes carries no risk. They are government-backed schemes. The objectives, risks, returns, and post-retirement benefits of these two schemes are completely different. Therefore, before investing, you need to understand the differences between the two schemes and the expected returns after 60.

Learn about the PPF Scheme

For information, PPF is a long-term savings scheme. The amount invested in this scheme remains safe and also offers tax benefits. Investors are offered an interest rate of 7.1%. The maturity amount in this scheme is received in 15 years. You can also extend the scheme for 5 years each year.

Speaking of investing in PPF, you can invest a minimum of ₹500 and a maximum of ₹1.5 lakh annually. Interest is earned on the amount deposited in this scheme. Furthermore, the maturity amount is tax-free.

Learn the details of the NPS scheme

Speaking of the NPS scheme, it is a retirement-focused scheme. Deposits can be invested in equities, corporate bonds, and government securities. Consequently, the returns are not fixed. In contrast, the returns in PPF are fixed. An NPS investor remains invested until the age of 60. After retirement, at least 20% of the total corpus must be invested as annuity. This determines the monthly pension. The remaining 80% can be withdrawn.

What is the difference between PPF and NPS?

PPF is completely safe. There is no risk to the amount invested in this scheme. Whereas NPS is market-linked, subject to fluctuations. Returns in PPF are fixed and tax-free, while NPS offers higher returns. The PPF scheme aims to promote savings and tax savings. NPS is specifically designed for a regular pension after retirement.

How much return will you receive from PPF after 60?

If a person invests up to ₹1.5 lakh annually in PPF starting at age 30 and continues this investment for 30 years, it earns approximately 7.1% interest. This means the total investment will reach ₹4.5 million at age 60. After adding interest, the total amount will reach ₹1.5 crore. The amount can also be extended after maturity. The proceeds are tax-free.

How much money will you receive in NPS after 60 years?

As for NPS, assume an annual return of approximately 10%. The total investment in this scheme over 30 years amounts to ₹45 lakh. Consequently, the total corpus is approximately ₹2.5 crore to ₹3 crore. At retirement, you can withdraw 80% of the total amount. Additionally, you can annuitize 20% of the amount, which will ensure a monthly pension.

Who are PPF and NPS suitable for?

For those who want a risk-free investment and tax benefits, PPF is the best scheme. For those who want a regular pension and are willing to take risks, NPS is the best scheme. This scheme also offers tax benefits.