It’s tax saving season, so it’s apt to ask: Should you buy into the New Pension Scheme (NPS) for which the government has given you a phenomenal extra tax benefit of Rs. 50,000 next year? The answer is complicated, so let’s go through the motions. Your choices are: a) Invest the Rs. 50,000 into an NPS scheme, every year, for the next 20 years. b) Pay taxes on the Rs. 50,000 (say at 30%) and invest the remaining Rs. 35,000 in a mutual fund instead. Your Goal : To maximize what you earn out after taxes when you retire. The NPS So you put in Rs. 50,000 a year into the NPS for 20 years. Since 2009, the average return in the NPS schemes has been between 10% and 12% annualized, even including equity. Let’s take 11% as the growth number going forward. You will end up with Rs. 32.10 lakh.… (Read On…)
[via Capital Mind]
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