Kolkata: Any financial strategist will tell you that the more time you can give to let the force of compounding work, the more (disproportionately) higher will be the level of wealth creation. NPS, or the National Pension System, has been designed keeping in mind the scope of allowing the force of compounding over the very long term. For example, one can use the NPS to keep building wealth for an individual for 6 decades or more. It is possible since one can start an NPS account for one kid in the very first year after birth. One can continue it till 60 or event after.
Else one can open an NPS account after one has turned 18. Even if one begins contributing the NPS from the age of 20, it can build a substantial corpus when one turns 60. Let’s see how the NPS calculator helps one to plan for financial security in the most vulnerable years of one’s life.
How can I calculate my NPS
One can start with an online calculator. The calculator available at the portal of the NPS Trust. For the sake of simplicity, let’s assume you belong to the non-government sector. Let’s also opt for the investment option of LC50, which means 50% of your investments will be allocated to the stock markets.
Next you have to type in your date of birth, amount of money in existing NPS tier1 account. It should be 0 if you don’t yet have an account. Then you will be asked the amount you will contribute every month. Next you have to mark how long you want to invest. You can contribute till the maximum age of 75. But, let’s assume that you would invest till 60 years. You will also be asked if you want to raise your monthly contributions to the NPS. If you don’t want to, simply type 0 there. Then you have to mark what share – 40% to 60% — of the total amount accumulated till 60 years you want to buy annuity with. Also, you have to mention what is the rate of annuity you are expecting. About 6-7% is considered a fair expectation. Then you have to press calculate.
How can I get Rs 50,000 pension per month in NPS
Once you reach 60, NPS will give you a onetime lumpsum payment and a monthly pension as long as you are alive. It is very easy to get a pension of Rs 50,000. Using the NPS calculator mentioned above, you can see that putting in Rs 3,000 a month from the age of 18, one can get a monthly pension of Rs 52,547 a[art form a onetime lumpsum payment of Rs 1,57,64,129 or more than Rs 1.57 crore. A return of 6.75% on the annuity corpus of Rs 1,05,09,419 has been considered here.
With another year approaching, it is perhaps the best time to start planning for financial security in old age. NPS, or National Pension System, offers you one of the most potent forms of long-term wealth creation. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
