Invest only Rs 166 per day and get monthly pension upto Rs 35,300

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Are you in your early thirties but yet have no plan for retirement? Don’t worry. Even if you are a late planner, there are attractive options.

National Pension System (NPS) is an option that can invest your money in tailormade style. It is a market-linked government instrument.

If you make a daily investment of Rs 166, it will amount to Rs 5,000 a month. It can build a neat corpus for you by the time you reach 60 years.

Let us consider a 30-year-old person who is trying to save for retirement. An investment of Rs 5,000 a month is sufficient to make a person a crorepati at the age of 60. He/she can also earn a minimum monthly pension of Rs 23,000 for the rest of his life.

Now just follow the steps.

Force of compounding We consider investing in NPS with active mode, with roughly of your money invested 70% in equity, 15% in corporate bonds and 15% in government bonds.

NPS calculator suggests that with Rs 5,000 per month from the age of 30 a nominal investment corpus of Rs 18 lakh.

Even if we estimate conservatively, the return would be a minimum of 10%. As per the trend of NPS, it gives a return of 12%.

Worst case Even in the worst-case scenario you will get Rs 1.14 crore at the very first day of your retirement.

Of this amount, 60% or Rs 68 lakh can be paid to you instantly and the rest Rs 46 lakh will be given to you as monthly pension of Rs 22,850 per month.

On the other hand, if the return is 12%, the return would be Rs 1.75 crore eventually. In this case, you can withdraw Rs 1.05 crore at the 60 years of age and Rs 71 lakh will be paid you monthly, as Rs 35,350 monthly pension.

Bottomline The tax benefits combined with the flexibility of how and where your money can be deployed makes NPS an ideal retirement product. If you are a late starter, don’t hesitate to invest in NPS. It would offer you good returns.

“NPS is market linked and yields high returns. I always advise my clients to go with NPS first and then with PPF. So, if you start late it will give you the highest return barring MFs, and if you start early then none would be as happy as you will be at the age of 60.” said Nilotpal Banerjee, a financial advisor based in Kolkata.