NPS vs PPF: Which One Is Better For Securing Your Financial Future?

Retirement is closer than you think. Saving for the future is the best financial strategy for a stable old-age life. Though there are various financial instruments available in the market, two government-backed schemes are the most prominent — Public Provident Fund (PPF) and National Pension System (NPS). Here’s a detailed comparison of both schemes for you.

Safety vs. Growth

PPF: Guaranteed returns by the government, like savings account interest. Steady growth, but potentially lower.

NPS: Invested in the stock market, so potentially higher returns, but also riskier.

Accessing Your Money

PPF: Less flexible – locked in for 15 years, with some access after 5 years.

NPS: More flexible – easier access to some funds after a while, but a big chunk is locked for retirement income (taxable).

Tax Benefits

PPF: The clear winner! You don’t pay taxes on your investment, interest, or even the final amount.

NPS: Get tax breaks on contributions, but some of the final amount is taxable.

Who should choose what?

PPF is good for: People who prioritize guaranteed returns, tax benefits, and some access to their money later, even with potentially lower growth.

NPS is good for: People comfortable with some risk for potentially higher returns and a long-term plan (20+ years). They are okay with limited access to funds after retirement.

According to experts, consider using both PPF and NPS for a balanced portfolio with security, tax benefits, and growth potential.