EPF vs PPF vs VPF vs NPS: Money making strategy! Top personal finance experts say do this to earn big gains

EPF vs PPF vs VPF vs NPS: National Pension System (NPS) and Employees Provident Fund (EPF) accounts are retirement oriented investment tools but unlike EPF, NPS scheme is market linked as the investor needs to choose equity and debt ration in one NPS auto and active account. According to experts, choosing 50:50 ratio in the NPS scheme will help an investor to beat the EPF balance growth by around 1.5 per cent which is huge as the investment in both options are for long-term.

Speaking on the possible equity debt ratio in one's NPS account that will bring down the risk factor to its lowest level and help investors to beat the EPS interest rate; SEBI registered tax and investment expert Manikaran Singhal said, "One should not invest keeping income tax exemption in mind. One should look at the returns at the time of maturity because if a person keeps equity and debt portion in 50:50 ratio, then it can expect to get around 10 per cent return on one's investment in the long-term perspective, which is around 1.5 per cent higher than the recent 8.5 per cent EPF interest rate announced by the central government for FY 2020-21."

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Singhal said that only 60 per cent of the NPS maturity amount is income tax exempted and hence people are shy of investing in the NPS and they choose Public Provident Fund (PPF) instead of NPS. However, he strongly recommended to prefer NPS ahead of PPF or Voluntary Provident Fund (VPF) or EPF; they won't be able to give double digit growth in the long-term.

Explaining how one's 50:50 ration will help NPS account holder to fetch 10 per cent returns; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Keeping both NPS accounts in 50:50 ratio, one can assume to get 8 per cent return on debt account and around 12 per cent return on equity account. So, in total one will be able to get 4 per cent on debt and 6 per cent on equity and half the sum is invested in debt and half the sum is invested in equity means net interest incurred on one's NPS investment would be 10 (4 + 6 = 10).