Thread by @Finology_Quest

NPS vs APY vs PPF : Where should you invest for your retirement?🤔

We've made it simple by using the following 7 parameters:

- Aim
- How does it work?
- Withdrawal
- Eligibility
- Risk appetite
- Income Tax Benefit
- Liquidity

#retirementplanning #personalfinances #finance

1⃣ NPS - National Pension scheme

Aim:
Provide regular income to citizens when they stop working.
#NPS

How does it work?

All you need to do is deposit an amount regularly and get the benefits of compounding on the returns.

Withdrawal:

Upon maturity, you can withdraw a part of the amount as a lump sum, and the remaining can be used to buy annuity.

Eligibility:

Anyone between 18-65 can subscribe to NPS

Risk appetite:

You can decide the allocation of your investment into debt (government, corporate) and equity instruments based on your risk appetite.

Income tax benefit:

Under section 80CCD and 80C, the maximum deduction is 1.5 lakhs under 80C and an additional benefit of 50000 under 80CCD.

Liquidity:

Lock-in period is too long. You cannot withdraw until the retirement age.

2⃣ APY - Atal Pension Yojana

Aim:
Provide fixed pension to its citizens, especially in the unorganised sector.
#APY

How does it work?

A subscriber needs to contribute until the age of 60. Based on your current age, your premium amount is decided.

Withdrawal:

One can only exit when he/she attains the age of 60. You will receive monthly pension after closing the scheme

Eligibility:

Anyone between 18-40 with savings account can subscribe to APY.

Risk Appetite:

The Scheme is backed by govt & regulated by PFRDA. Hence, the scheme carries no risk.

Liquidity:

You can exit before maturity only in exceptional circumstances.

3⃣ PPF - Public provident fund

Aim:

To help investor make small savings & create a corpus for their retirement.
#PPF

How does it work?

A PPF Subscriber needs to contribute in this scheme for minimum 15 years. You can invest minimum 500 & max 1.5 lac per financial year.

Withdrawal:

You can withdraw funds only after maturity period (15 years). Partial withdrawals are allowed only in certain circumstances.

Eligibility:

Any Indian citizen can open PPF account, even minors can open this account as long as there is a guardian to operate it.

Risk Appetite:

The Scheme is backed by govt & regulated by PFRDA. Hence, the scheme carries no risk.

Income tax benefit:

Entitled to the benefits of tax exemptions under section 80C.

Liquidity:

Lock-in period of 15 years.

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#financewithfinology