How to invest in the National Pension System?
Those who opt for the National Pension System (NPS) will have to adopt a slightly different investment strategy, as the NPS has historically given an annual return of around 10%.
How much you need to save to accumulate up to Rs 1 crore:
Monthly investment: Rs 5,000
Expected annual return: 10%
Total investment in 30 years: Rs 18,00,000
Total funds on maturity: Rs 1,13,02,440
Total interest earned: Rs 95,02,440
Note that 40% of this fund, or about Rs 45,20,976, will have to be allocated to an annuity scheme so that you can get a pension after retirement. The rest of the amount will be available for your other needs.
Small Savings Schemes
Small Savings Schemes are savings schemes run by the Central Government, designed to provide safe and assured returns to small investors. These schemes offer a fixed return to investors without risk. Small Savings Schemes include a variety of savings schemes, such as Public Provident Fund (PPF), National Savings Certificate (NSC), Post office Savings Account, Kisan Vikas Patra (KVP), and sukanya Samriddhi Yojana. Each scheme has a different objective and benefit.
How much to invest to reach the target of Rs 1 crore?Small savings schemes offering 8% annual return require a different investment approach to reach the target of Rs 1 crore:
Monthly investment: Rs 7,000
Expected annual return: 8%
Total investment over 30 years: Rs 25,20,000
Total amount on maturity: Rs 1,05,02,066
Total interest earned: Rs 79,82,066
By investing Rs 7,000 per month in a small savings scheme offering 8% return, you can get a corpus of over Rs 1 crore, making it a viable option for conservative investors.
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