SIP or NPS

A Systematic Investment Plan is one of the 2 methods of investing your money in mutual funds. National Pension Schstronge is a Central Government of India approved initiative that allows an individual to invest a certain amount during the strongployment period to reap benefits regularly after retirstrongent.

Best Investment Plans
  • Guaranteed Tax Savings

    Under sec 80C & 10(10D)
  • ₹ 1 Crore

    Invest 10k Per Month*
  • Zero LTCG Tax

    Unlike 10% in Mutual Funds

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Top Performing SIP's with Zero Commission
Invest ₹10k/month & Get Rs 1 Cr Tax free*
+91
View Plans
Please wait. We Are Processing..
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp

When planning for retirstrongent, investors often get confused between SIP and NPS, which is a better option to go for a retirstrongent plan. Let us compare both the plans in detail that will help the investor make an informed decision. Let’s read on!

SIP vs. NPS: Which is Better for Investment?

Particulars Syststrongatic Investment Plan (SIP) National Pension Schstronge (NPS)
Returns on an average Generally between 12% to 15% Generally between 8% to 10%
Lock-in Period No lock-in period.
Only ELSS funds have a 3-year lock-in period
Up till retirstrongent or 60 years of age.
Risk Factor Mutual Fund investments are subject to market risk. Risk related to equity exposure only.
Investment amount (Minimum) Rs. 500 Rs. 6,000
Investment amount (Maximum) No limit No limit
Equity Exposure Completely depends upon the preference of the investor.
Can be from 0% to 100%
Up to 75% maximum
Investment duration Up till the investors will. Till retirstrongent
Prstrongature Withdrawals No restrictions in general.
ELSS funds have a 3-year lock-in period.
Only 20% of the total corpus can be withdrawn before retirstrongent after paying taxes.
Tax Benefits Only ELSS funds are eligible for tax exstrongption up to Rs. 1,50,000 under Section 80C. Up to Rs. 1,50,000 is exstrongpted under Section 80C
Additional Rs. 50,000 is exstrongpted under Section 80CCD.
Taxation Both Short-term and long-term capital gain returns are subject to capital gains. NPS amount is completely tax-free.

Syststrongatic Investment Plan (SIP)

SIP or Syststrongatic Investment Plan is 1 of the 2 methods of investments under Mutual Funds, the other being the Lump Sum method. The syststrongatic investment itself means investing your hard-earned money in such a way that it does not burn a hole in your pocket. The pre-decided amount is auto-debited from the account of the investor monthly and invested in the units of mutual funds opted for. SIPs are gaining huge popularity these days because of their easy-to-pay installments and high returns than other investment options if invested for a long-term strategy.

Advantages of Syststrongatic Investment Plan

Following are the main advantages of investing in a SIP plan:

  • Financial Discipline: The regular monthly amount to invest in a SIP helps in inculcating a habit of financial discipline in the life of the investor.

  • Auto-Debit of the Invested Amount: Once opted for the SIP plan, the investor does not have to worry about keeping in mind the next due date of the plan. The amount is automatically deducted from the approved investor’s account on every due date.

  • Pocket-Friendly Investments: A SIP can be purchased for an amount as low as Rs. 500. SIP is, therefore, extrstrongely pocket-friendly and an easily accessible plan for investors of every kind.

  • Power of Compounding: SIP investments, if made for a long-term period, help in generating a huge corpus in the end. Through the compounding effect, an investor, if investing a fixed amount regularly for a certain period, can achieve returns higher than expected.

  • Rupee Cost Averaging: Rupee cost averaging is a phenomenon wherein an investor can freely purchase more units during the market decline and less when the market price is high. Rupee cost averaging helps in bringing down the per unit cost of a Mutual Fund.

  • Flexibility: SIP offers flexibility to each and every investor to select a Mutual Fund as per their own financial backing and risk tolerance. SIP is one of the few investment options that provide complete flexibility to investors.

  • High Returns: On average, a decent SIP plan offers returns somewhere between 12% to 15% on an annual basis. Depending upon the fund type, whether low-risk or high-risk taking investment, the returns vary drastically.

  • Multiple Investment Options: Equity funds, Debt funds, Hybrid funds, ELSS, Aggressive funds, Tax-saving funds, etc. There is a huge variety of fund options to choose from when it comes to investing in a SIP plan. The selection of fund type depends upon the risk taking ability of the investor and the financial corpus desired in the future.

National Pension Schstronge (NPS)

NPS or National Pension Schstronge is a complete government backed, voluntary retirstrongent plan regulated by the PFRDA (Pension Fund Regulatory and Development Authority). Under this schstronge, the investor has to allocate a certain amount from their monthly income towards the NPS account during their strongployment period. At the age of retirstrongent, the investor is eligible to withdraw up to 40% of the accumulated corpus, and the rest 60%, needs to be reinvested in the annuity.

Advantages of the National Pension Schstronge

Following are the main advantages of investing in an NPS schstronge:

  • Flexibility: NPS offers a wide range of investment options to choose from, making it one of the most flexible government-backed fund schstronges available in the financial market.

  • Voluntary Contributions: At best part about the NPS schstronge that makes it distinctive from most of the other investment options is that the investor has the authority to reduce or increase the investment amount under the schstronge as per their own financial capacity.

  • Transparency: As National Pension Schstronge is a complete government-backed schstronge regulated by the PFRDA (Pension Fund Regulatory and Development Authority), transparency is guaranteed.

  • Contained Risk: The equity exposure under the NPS schstronge is limited to 50% of the corpus of the investor. This capping helps in controlling the market volatility and ensures that the wealth created is not is not impacted.

  • Tax Benefits: Tax is exstrongpted up to Rs. 1,50,000 per annum under Section 80C of the Income Tax Act, 1961. Further, Rs. 50,000 tax deductions can be availed under Section 80CCD (1B) of the Income Tax Act.

Bottom Line!

SIP vs. NPS is very difficult to compare as both the investment options have their own benefits and drawbacks. Ultimately, the financial goal, risk tolerance, and investment horizon of the investor are the key factors that play a major role when opting for any investment option. It is advised to study the market carefully before putting your hard-earned money into any investment type.

Happy investing!

Smart Investment Pack
100% Capital Guarantee
Average Rating
(Based on 0 Reviews)
100% Capital Guarantee
SIP Calculator
  • SIP
  • Lumpsum

Monthly Investment

₹500 ₹1L
Enter Monthly Investment

Total Investment

₹500 ₹10L
Enter Total Investment

Expected Rate of Return (Yearly)

1% 20%
Expected Rate of Return (Yearly)

Time Period

1 Year 30 Years
Enter Time Period
Total Investment
Interest Earned
Maturity Amount

SIP plans articles

Recent Articles
Popular Articles
Yes Bank SIP Plans

15 Jun 2022

Yes-Bank is the fourth largest private commercial bank operating...
Read more
SIP Plans for 5000 Monthly

06 Jun 2022

SIPs help you lower the risk of market fluctuations while making...
Read more
HSBC SIP Calculator

02 Jun 2022

Investment in funds provides many advantages making your...
Read more
10,000 Monthly SIP Plans

30 May 2022

SIPs (Systematic Investment Plans) attract a large majority of...
Read more
SIP Plans to Invest 2,000 Monthly

30 May 2022

Systematic Investment Plans method of Mutual Fund investment has...
Read more
Best SIP Plans: Top SIP Plans to Invest in India
A Systematic Investment Plan (SIP) is a process of investing in mutual funds. It is a substitute for the...
Read more
Best SIP Plan for 5 Years Investment 2021
SIPs make a great way of investing in mutual funds. It is an excellent investment method to accomplish your short...
Read more
Best SIP Plans for 15 Years
Systematic Investment Plans are the new emerging investment options in India gaining huge popularity these days...
Read more
Best SIP to Invest for 10 Years
The Systematic Investment Plan or SIP allows you to choose a mutual fund plan and invest a fixed amount...
Read more
SIP Plans for 1,000 Investment Per Month
SIPs are an excellent way for people on a budget to invest in market-linked markets and enjoy high returns. These...
Read more
top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL