When planning for a secure financial future, two of the most popular investment options in India are the Public Provident Fund (PPF) and the National Pension System (NPS).
Both offer unique benefits and cater to different investor needs. Here’s a comparison to help you decide which one is better for you.
Risk and Return
PPF offers risk-free returns backed by the government, making it ideal for conservative investors.
NPS, being market-linked, carries higher risk but offers the potential for higher returns.
Tax Benefits
Both schemes provide tax deductions under Section 80C, but NPS offers an additional benefit under Section 80CCD(1B).
Liquidity
PPF allows partial withdrawals and loans against the balance after certain years.
NPS allows partial withdrawals for specific purposes, with restrictions on full withdrawal before retirement.
Investment Tenure
PPF has a fixed tenure of 15 years.
NPS contributions are made until the age of 60, with the option to extend.
Purpose
PPF is suitable for general long-term savings with guaranteed returns.
NPS is designed specifically for retirement planning, offering a mix of equity and debt investments.