SIP vs NPS: Which can help generate larger corpus on Rs 15,000 monthly investment for 25 years; get calculations
Compare NPS vs SIP to find out which investment plan generates a larger corpus with a Rs 15,000 monthly investment over 25 years. Discover returns, benefits, and maturity amounts for both options.
ZeeBiz WebTeam | Sep 20, 2024, 02:45 PM IST
Are you deciding between NPS and SIP for long-term investments? With a Rs 15,000 monthly investment over 25 years, we break down the potential returns, benefits, and maturity amounts of both plans. Find out which option—SIP or NPS—can help you generate a larger retirement corpus effectively.
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Systematic Investment Plan (SIP)
A method of investing in mutual funds where an investor chooses a fund and invests a fixed amount at regular intervals.
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How SIP Works:
- Fixed amount debited from your account and invested in the chosen mutual fund.
- Units are allocated based on the fund's NAV (Net Asset Value) on the investment date.
- Additional units are added with each investment.
- Returns can be received at the end of the SIP tenure or periodically.
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Investment Example:
- Invest Rs 500 monthly into a mutual fund.
- Amount auto-debited and invested each month at a fixed date.
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When to Invest:
- Start anytime; early investments provide higher returns.
- Choose a scheme aligned with long-term financial goals.
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Types of SIP
Various types available to suit different goals and preferences.
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SIP Investment for Rs 15,000 Monthly for 25 Years:
- Invested Amount: Rs 45,00,000
- Estimated Returns: Rs 2,39,64,526
- Total Value: Rs 2,84,64,526
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How NPS Works:
- Invest a regular sum, accumulate pension wealth, and purchase a life annuity at retirement.
- A portion of the accumulated wealth can be withdrawn as a lump sum.
- Regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
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National Pension System (NPS)
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Definition:
A voluntary retirement savings scheme designed to provide a sustainable retirement income through planned contributions.
Definition:
A voluntary retirement savings scheme designed to provide a sustainable retirement income through planned contributions.
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Eligibility:
- Open to Indian citizens aged 18-70.
- Must comply with KYC norms.
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Benefits of NPS:
- Low Cost: World’s lowest-cost pension scheme with minimal administrative fees.
- Simple: Easy account opening with Permanent Retirement Account Number (PRAN) via any POP (Point of Presence).
- Flexible: Choose investment options or let Auto choice manage investments for better returns.
- Portable: Operate the account from anywhere and make contributions via eNPS.
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NPS Investment for Rs 15,000 Monthly for 25 Years:
- Total Investment: Rs 63,00,000
- Interest Earned: Rs 3,78,26,767
- Maturity Amount: Rs 4,41,26,767
- Minimum Annuity Investment: Rs 1,76,50,707