If one invests Rs 6000 in NPS then the net yield after 30 years would be minimum 75% higher, as compared to mutual fund and insurance considering the fund performance is same and just because of much higher Fund management charges and allocation charges being charged by them. The 75% higher return is just because govt is also contributing Rs.1000/- per annum, just because, fund management charges being levied
Hence if you want to invest Rs.24000/- better open 4 accounts from your family and invest Rs.6000/- each where you get Rs.4000/- from the government.. Please refer the table
below where comparison is shown in the net yield @ various interest rate with or without govt contribution and be surprised by what difference Rs.1000/- government contribution will make to your portfolio.
Investment of Rs.6000/- is done per annum, if investment amount per annum is higher then increase in Net yield% would fall
Assumptions:
Fund management charges for mutual funds 2%
FMC and all other charges in NPS would never exceed 0.055%
ULIPS have lower FMC than mutual fund but loaded heavily with allocation charges in initial policy years
Fund performance of NPS, ULIP and Mutual funds are the same
Investment duration is 30 years
Disclaimer: These are just the indicative figures, please do your own research before investing.
NPS | Mutual fund/ULIP’s | ||
| Investment amount (per annum) | 6000 | Investment amount (per annum) | 6000 |
| Returns @10% | 1085661 | Returns @10%(deducting 2% per annum FMC) | 734075 |
| Returns @10% with govt contribution | 1266604 | Returns @10% with govt contribution | NA |
| Increase in net yield(due to Rs 1000/- govt contribution) | 180943 | Shortfall compared to NPS(with govt contribution) | -532529 |
| Increase in net yield% | 17% | Loss in net yield% compared to NPS(with govt contribution) | -73% |
| Investment amount (per annum) | 6000 | Investment amount (per annum) | 6000 |
| Returns @12% | 1621756 | Returns @12%(deducting 2% per annum FMC) | 1085661 |
| Returns @12% with govt contribution | 1892048 | Returns @12% with govt contribution | NA |
| Increase in net yield(due to Rs 1000/- govt contribution) | 270292 | Shortfall compared to NPS(with govt contribution) | -806387 |
| Increase in net yield% | 17% | Loss in net yield% compared to NPS(with govt contribution) | -74% |
| Investment amount (per annum) | 6000 | Investment amount (per annum) | 6000 |
| Returns @14% | 2440422 | Returns @14%(deducting 2% per annum FMC) | 1621756 |
| Returns @14% with govt contribution | 2847159 | Returns @14% with govt contribution | NA |
| Increase in net yield(due to Rs 1000/- govt contribution) | 406737 | Shortfall compared to NPS(with govt contribution) | -1225403 |
| Increase in net yield% | 17% | Loss in net yield% compared to NPS(with govt contribution) | -76% |
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