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EPF vs PPF vs NPS: Save tax, secure future; which scheme holds the key to becoming a millionaire?
Retirement Planning: This article provides a detailed comparison of EPF, PPF and NPS schemes to create a large corpus for the future ...Read More
EPF vs PPF vs NPS: Save on taxes, secure your future; which scheme holds the key to becoming a millionaire?
Do you also want to build a large fund for the future (Types of Investment)? But are you looking for something that's both safe and tax-saving (How to save tax)? If so, this news is for you. Today, we'll explain these three schemes: EPS, NPS, and PPF, in a very simple way, and tell you which one can help you become a millionaire (Investment for the future).
EPF vs PPF vs NPS
When it comes to saving taxes and building a large retirement corpus, EPF, PPF, and NPS are considered the best options. However, the way these schemes work is quite different. While EPF and PPF are safe government-backed schemes, NPS also invests your money in the stock market, which offers greater earning potential but also carries some risk.
Now you can understand the features of all three schemes through the table given below:
|
Features |
EPF (Employee Provident Fund) |
PPF (Public Provident Fund) |
NPS (National Pension System) |
|
Mainly for whom? |
Mainly for salaried employees |
Any citizen of India (employed, employed, or otherwise) |
Any eligible Indian citizen |
|
Who invests? |
Employee and company together (12% each of basic salary) |
The individual investor himself |
The individual investor himself |
|
Minimum and maximum investment |
Mandatory 12% of basic salary and DA |
Minimum Rs 500 to maximum Rs 1.5 lakh per year |
Minimum Rs 1,000 for Tier-1, no maximum limit |
|
Return Type |
Fixed and government supported |
Fixed and government-backed (reviewed every quarter) |
Market-based (investment in equity and debt, returns not fixed) |
|
Lock-in period |
Till retirement (withdrawal possible for certain special needs during employment) |
15 years (extendable on completion of tenure) |
Up to age 60 (premature withdrawal has strict rules) |
|
Safety and Risk |
Fully Secured (Government Guarantee) |
Fully Secured (Government Guarantee) |
Subject to market fluctuations (involves market risk) |
Who is winning in the calculation?
Calculation for EPS
- Monthly Salary: ₹30000
- Contribution of monthly salary: 12% (means ₹3600 will be deposited in the PF account every month, ₹43200 will be deposited in the year)
- Years of investment: 30 years
- Current interest rate: 8.25%
- Total investment over 30 years: ₹12,96,000
- Funds generated after 30 years: ₹1,48,94,112
Calculation for PPF
- Investment for the whole year: ₹150000
- Current interest rate: 7.1%
- Years of investment: 25 years
- Total investment over 25 years: ₹37,50,000
- Funds generated in 25 years: ₹1,03,08,015
Calculation for NPS
- Monthly investment: ₹10000
- Average Return: 9%
- Investment years: 35 years (if started investing at 25 years)
- Total investment in 35 years: ₹42,00,000
- Retirement Fund: ₹2,94,17,845
Which option will be better for you?
Choose EPF if: You are a salaried employee and want to create an automatic retirement fund every month in collaboration with your company without any risk.
Choose PPF if: You want a completely safe investment, want to save tax and for this you are ready to lock the money for a long period of 15 years even if you are not employed.
Choose NPS if: You are willing to take some risk like the stock market to build a large corpus for retirement and want to get maximum returns in the long term.
PC: Prabhat Khabar
