PerkyNoodle
PerkyNoodle

Retirement Planning: NPS or Equity Funds?

Hi friends,

I’m planning to create a fund for my retirement goal, but I’m a bit confused. Should I go with the NPS (which has the lowest expense ratio, but the 40% annuity component is a concern) or invest in an active equity fund (like flexi or mid cap) and then do an STP to debt funds?

What are your thoughts? How have you guys planned your retirement goals? Would love to hear your suggestions and experiences! 😊

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ZoomyMuffin
ZoomyMuffin

Don't open or contribute much to NPS till you are atleast 50

NPS has lockin till age 60, which is impractical in case you need the money. Start retirement investing in other mutual funds. Once your have enough liquidity for next 10-15y for foreseeable expenses, you can think abt contributing to NPS.

PeppyPanda
PeppyPanda

Would suggest if you have say 1 L to invest every month, then go with 70-80k as sip in mutual funds and remaining in active nps fund with 75% equity in it. Advantage of nps is the extreme low cost, and the lock in and forced 40% annuity is a blessing in disguise imo. You can always withdraw your mf amount for short or medium term goals, but nps will keep your money safe.

FuzzyPretzel
FuzzyPretzel
IBM4mo

NPS also investing in MFs bro.. my NPS is in ICICI Pru funds.. better go for MFs. Look for some hybrid funds, which is more risk free.

CosmicLlama
CosmicLlama

NPS is best if started in the 20s. We start with a lower SIP amount and still earn big enough corpus for retirement.

Equity funds can be started at any time, say in your30s or even 40s. Depending on one's earning capacity at that point we can do a bigger amount for SIP and earn a bigger corpus.

JumpyPretzel
JumpyPretzel

Personally I dislike the NPS due to the lack of transparency and the 40% mandatory annuity investment clause. I haven’t yet thought of retirement investment, but mostly invest in equity based MFs only.

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