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  • Ankur 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.


Retirement: NPS or 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 funds –

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  • In NPS only 20 % of the total amount can be withdrawn whereas in the case of MF it can be redeemed anytime.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