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Tag: Investments

Is NPS A Good Investment Plan?

The National Pension Scheme primarily aims at benefiting the employees of private and semi-government organisations. The ones in government sectors were liable to a pension after the retiring age. But the same did not stand for private and semi-government employees. Under the administration of PFRDA (Pension Fund Regulatory And Development Authority), the New Pension Scheme under National Pension Scheme was introduced. This provides annuitized returns to private and semi-government employees on the basis of their application for an NPS account.

Investment in NPS

Benefits of NPS (National Pension Scheme)

NPS is an investment scheme that should be given value. For an employee of a private firm, NPS has multiple benefits:

  • Low Investment Cost: The minimum amount to maintain a Tier-1 account is INR 6000 which makes a minimum INR 500 monthly. Thus the initial principal amount is very less.
  • Tax Benefit Under Section 80C: If an individual invests in a Tier-1 account, he is liable to tax deductions under section 80C of the Tax Framework. Under the new budget, an additional tax exemption of INR 50,000 will be provided for investing in NPS. Apart from that, the usual benefit states that 10% of the salary invested in NPS will stand for the deductions up to 1.5lakhs. Thus a total deduction of taxes is 2lakhs.
  • Flexibility: Opening a Tier-1 account was risky if a case of emergency occurred. This is because the withdrawal of the amount before maturity was taxable. The new flexible NPS states that after retirement 40% of the funds in NPS can be withdrawn without taxation. The remaining 60% will become annuitized for returns.
  • Diversity: NPS provides many diverse investment schemes in the form of EGC investments. E is Equity Investment, G is Government Bonds and C is Constant or Fixed Return Investments. An individual when investing can diversify the principal funds among these three options as per their needs.

Drawbacks of National Pension Scheme

  • Lower Returns Than Other Equities: The Equity Scheme under NPS is comparatively less profitable than the rest of the market. Equity Investment is an investment in stocks that generates returns on the basis of dividends. Thus the return rate is much higher in the market.
  • Withdrawal Is Restricted: The amount invested amount is taxable on withdrawal. Even after the retiring 40% funds withdrawn is not taxable. While it is not a very big disadvantage considering normal situations, but in a case of a risky scenario, this can become very disadvantageous.
  • Low Return Rates On Annuitized Amounts: For being liable to a monthly pension after retirement, a minimum of 40% of the maturity amount needs to be contributed to annuity investments. But the return rates of these investments are very low as compared to other investment schemes.

Is NPS A Good Investment Plan?

In the light of benefits provided by Mutual Funds and Employee Provident Funds (EPF), NPS is not very attractive given its low return rates on annuity investments and the withdrawal policy. To secure their retirement with annuitized funds from the government, then investments should be made in the diverse schemes, EGC. Maximal profit returns from investments can be gained by contributing to a variety of schemes together like NPS, Mutual Funds and EPF. This will help reap benefits from all and excellent returns both in terms of tax deductions and maturity amount.

5 Reasons Why You Should Invest In An Insurance

The future is unsure and the prospect of untoward incidents are many. A practical approach in dealing with life suggests that you should always be prepared for a scenario where a negative event may occur. That preparation is what Insurance is all about. Investing in it may not always alter the negative event, but it will sure help you deal with the unwanted scenario in the best possible manner. So, it is a remedy to the unwanted problems in life.

insurance

Provides Aid To Families In An Event Of Death

Life Insurance is perhaps the most important investment a person should make. In society, an individual is not alone. The dependency of one person on another is how the cycle works.  So the absence of an individual who was relied upon brings not only an immense wave of sadness but also a sense of helplessness. And that is where a Life Insurance helps. In the event of death, whether timely or untimely, if a person has the coverage of Life Insurance, it is what protect’s their family and aids them financially in fighting difficult times. Sometimes in event of death of the sole breadwinner of the family, a Life Insurance is what keeps the other members financially protected. Thus, we see why it is of utmost importance.

Makes Sure That You Can Book A Travel Without Worries

Another Insurance where investment should be made is Travel Insurance. Every one likes to treat themselves with a luxurious vacation. Flights are lengthy and costly, stays are expensive and all related expenses are equally high-priced. In case of sudden cancellation, the losses to be borne are too high, if all of this is not protected by Travel Insurances. For a person belonging to the middle-class on a financial basis, it is difficult to bear such losses in the absence of an Insurance as many cost cuttings need to be done henceforth.

Keeps Your Residential Property Ownership Stable

Real Estate is perhaps the most expensive asset in the market of today. If a person is lucky enough to purchase a residential area, under their own name, they should keep it safe. Investing in Home Insurance will help you financially in case of any loss pertaining to your resident. Thus it is another important Insurance that should be considered as soon as a property is bought under one’s name.

Ensures Stability In Personal And Professional Life

Insurances keeps our personal as well as monetary assets protected. Thus in case of any mishaps it helps retain stability. The important things about investing in an Insurance is that we have options aplenty to keep all our properties safe. Apart from the standard Insurance policies, we can also insure our other business and personal assets. So, stay insured to stay stable.

Helps Maintain Peace Of Mind

Nothing gives us greater peace of mind that to know that we are prepared for the future. Investing in insurances give us just that. Knowing that we will be aided while dealing with every unhappy and uncalled for event in our lives, we can remain stress free.