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  • Writer's pictureAnkur Kapur

Is NPS better than Mutual Funds?

The NPS and Mutual Funds themes are both market-linked and have several similar benefits, yet there are some significant differences between the two and also specific individual advantages.


Is NPS better than Mutual Funds?

The National Pension Scheme (NPS) is a retirement saving scheme launched by the government of India to secure the life of an individual financially after retirement. NPS is a long-term investment plan that helps to secure long-term goals.


Mutual funds are formed by money pooled by a huge number of investors having common investment objectives. This money is then invested in bonds, equity, government securities, etc. It provides different plans to invest in based on your long-term and short-term financial goals.


Here is the basic difference between these fund –

  • The minimum investment amount of NPS is Rs 6000. Whereas the minimum investment amount of MF is Rs 500. The Lock-in period of an NPS is till retirement whereas in MFs do not have a lock-in period other than ELSS funds.

  • Flexibility is low in the case of NPS whereas MF has high flexibility.

  • In NPS only 20 % of the total amount can be withdrawn whereas in the case of MF it can be redeemed anytime.

  • In the case of NPS, up to Rs 150,000 with additional benefits of 50,000 rupees tax benefit is availed whereas, in a mutual fund, ELSS exempts tax to investments up to Rs 150,000.

Both NPS and Mutual funds are great options, NPS is great for long-term investments and a much safer option, mutual funds help in achieving your short-term and long-term goals.


If you are looking for your retirement plan and securing your post-retirement life then you should have a combination of NPS and mutual funds.

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