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PPF vs NPS: Which scheme is better in terms of returns? Check what experts suggest
PPF vs Mutual Funds: Public Provident Fund (PPF) is a long-term investment tool while if the mutual fund investments are for the longer term, it can also become a long-term investment tool.
PPF vs Mutual Funds: Public Provident Fund (PPF) is a long-term investment tool while if the mutual fund investments are for the longer term, it can also become a long-term investment tool. However, PPF is completely a debt-instrument and risk-free investment option while the National Pension System (NPS) is market-linked and hence NPS scheme is not 100 per cent risk-free. According to experts, PPF is an ideal place to park one's money if one's risk appetite is low but in the case of an investor who has little appetite to take risk then NPS account is one of the most preferred investment tools for them.
PPF vs NPS: Major Confusion
Manikaran Singhal, Founder at goodmoneying.com, said, "Both PPF and NPS are voluntary contribution options. When it comes to choosing either PPF or NPS, people get confused as to which would give them more income tax exemption. Generally, people invest in NPS when their PPF limit of Rs 1.5 lakh under Section 80C is over."
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PPF vs Equity Returns Compared
On NPS vs PPF Kartik Jhaveri, Manager — Wealth Management at Transcend Consultants said, "Due to the equity exposure in NPS account, if an investor chooses the 50:50 option of the equity and the debt options, in the long-run debt option would give around 8 per cent returns while the equity exposure would give at least 12 per cent returns in the long-term." So, the net NPS interest rate in the long-term in this debt-equity ratio will be around 10 per cent.
So, at a time when PPF interest rate is 7.1 per cent, NPS interest rate would be around 2.9 per cent higher if the investor chooses 50:50 ratio in the debt and equity NPS account.
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