NPS: There are many investment options available in the market for retirement, but NPS is one of the most popular options among them. This is a retirement saving scheme started by the Government of India. It is better to plan according to age for investment in NPS. There are chances of getting bumper returns in old age from this
Gone are the days when retirement planning was considered to be the lot of people aged 50 or 60. Today, when job stability seems like an illusion and inflation is slowly eating away at your savings, it has become necessary to start preparing for retirement at the age of 20 or 30. In such a situation, retirement planning is very important for a stress-free and financially secure future. The National Pension System (NPS) has emerged as an important tool for retirement planning. In this, investors not only get flexibility but also many tax benefits.
It is better to plan investments according to age in NPS. This is a government-monitored pension scheme. The aim of this scheme is to ensure regular income after retirement. The special thing about this scheme is that while investing the money of the investors, the asset allocation of their portfolio is done keeping in mind the age. More money of younger investors is invested in equity i.e. stock market, whereas as age increases, equity allocation is reduced and allocation in debt is increased. Let us know how to invest in NPS according to age.
Age-wise investment strategy in NPS
Investing in National Pension System (NPS) according to age is considered better. It has been designed accordingly. If you invest at the age of 35, then a large part of the investment is invested in equity. There is more risk in this, but there is a possibility of getting huge returns in the long term. With increasing age, the ability to bear risk decreases. Therefore, their investment is gradually shifted towards debt, such as corporate bonds and government securities. The purpose of this investment strategy is to balance the risk associated with investment.
How to create a huge fund by investing at the age of 40
Many employees working in the private sector think about investing after 10 years of employment. Sometimes people plan for retirement after the age of 40. If you are also doing this, then there is no need to worry. According to the news published in Financial Express, you can create a huge fund even after the age of 40. If you are retiring at the age of 60 and invest at the age of 40, then you can achieve your target in 20 years.
- Starting age: 40 years
- Investment period: 20 years
- Investment in NPS every month: Rs 20,000
- Top up investment every year: 10%
- Your total investment in 20 years: Rs 1,37,46,000
- Estimated return on investment: 10% per annum
- Total corpus: Rs 3,70,44,360 (Rs 3.70 crore)
- Total profit: Rs 2,32,98,360 (Rs 2.33 crore)
- Total tax saving: Rs 41,23,800
You will have to buy annuity for pension
- Investment of pension wealth in annuity plan: 55%
- Annuity rate: 8%
- Pension wealth: Rs 2,03,74,398 (Rs 2.04 crores)
- Lump sum withdrawal amount: Rs 1,66,69,962 (Rs 1.67 crores)
- Monthly pension: Rs 1,35,829 (about Rs 1.36 lakhs)
- By investing with this strategy, you will get a lump sum fund of Rs 1.67 crores on retirement at the age of 60. At the same time, you will start getting pension of about Rs 1.36 lakh every month.
