NPS has evolved as a good financial product for retirement planning. The government is trying to make it more attractive by giving extra tax benefits to the investors. The NPS is drawing attention because of its tax benefit under section CCD (1b). It also forces you to save regularly, save on taxes and build a retirement corpus. If withdrawal is made after 60 years of age, at least 40 per cent of the accumulated funds must be used to buy an annuity. The rest of the money can be withdrawn in a lump sum.
If you are looking for a tailor-made government sponsored scheme to invest for your retirement, you can consider investing in NPS. But you should opt for it only if you are prepared to hold on to your investments till your retirement at 60 years. If you can take care of your long-term investments on your own, you can go ahead with your investments in Equity Linked Savings Schemes (ELSSs) or diversified equity funds.
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