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Out of NPS and PPF, which one is better?

For any period of 10-15 years or more, the NPS should be the right choice, suggests Dhirendra Kumar

Out of NPS and PPF, which is a better option to invest for retirement?
- Sumedha

It depends on your time frame. If you are investing for 15 years and more, then go for NPS which has a large equity allocation. Although PPF gives you a guaranteed return, it is much lower than what you can earn from equity. Today, it has become possible in your NPS account to have a 75 per cent allocation to equity.

Besides, the low cost of NPS makes it very attractive. On top of it, you get a similar tax break. When you invest in PPF, you get the benefit of Section 80C. When you invest in NPS, you get a little more than Section 80C benefit because you can invest Rs 1.5 lakh and an additional Rs 50,000. Thus, the NPS offers a little extra tax break, potentially superior return and has a lower cost. So, for any period of 10-15 years or more, the NPS should be the right choice.

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