NPS calculator is a tool that allows an investor to get an estimate of the wealth gained, maturity amount of the entire investment, and monthly pension amount to be received. This amount is based on the contribution towards NPS, and tenure of investment.
The NPS calculator helps an investor estimate the amount to be invested to achieve the financial goals. The more the accumulated amount, the eventual benefit of the accumulated amount will be larger. The wealth gained is due to the power of compounding that makes NPS an attractive retirement wealth plan An investor needs to enter the monthly or yearly investment amount, current age (>= 18 years), and the withdrawal % on retirement.
Example – If an investor wants to invest Rs 50000 per year in a retirement scheme. But before investing the amount and opting for a specific retirement scheme he wants to evaluate NPS investment. He now wants to know the wealth that can be gained out of NPS investment. He must use Dhan's online NPS return calculator.
He must first decide whether he wants to invest monthly or invest the entire Rs 50000 yearly at once and the amount he wants to withdraw on maturity or retirement. Let’s say the investment type selected is yearly, the current age of the investor is 30 years, and withdrawal % of 40%. Here, the calculator will do the calculation and the results are as below:
Monthly pension- Rs 34,617
Wealth Gained- Rs 39,56,181
Withdrawal (on Retirement)- Rs 98,90,453
The calculator provides the estimation of monthly pension and wealth gained and does not assure or claim the values calculated. Since the NPS scheme involves the allocation of funds in equities based on the type of account selected, the actual returns may vary due to the % of the allocation to equities and the performance of the underlying assets and the market conditions.
The NPS calculator can be used by an individual who is eligible to invest in NPS. An investor who wants to invest in NPS and wants to get an estimate of wealth to be gained for a given investment amount can use the simple and easy to use NPS calculator
All Indian citizens over the age of 18 years but not more than 60 years are eligible to invest in the national pension scheme. All applicants to NPS are required to comply with the Know Your Customer (KYC) guidelines and submit relevant documents of identity proof, address proof, bank account details, etc.
The more an investor invests in the NPS scheme, the more is the accumulated amount and larger is the retirement benefit out of the accumulated pension wealth due to the power of compounding which makes NPS attractive for the investors
The national pension scheme online calculator asks an investor to input the following,
You need to enter the below details to know the accumulated corpus amount and monthly pension amount on retirement.
For a better understanding let us look at an investors investment lifecycle in 2 stages i.e. accumulation stage and retirement stage.
During the accumulation stage an investor accumulates funds and builds a corpus by investing in the NPS scheme, the scheme in turn invests in a mix of assets which provides wealth appreciation and returns.
The amount invested is pooled together into a pension fund. This pension fund is managed and invested by professional fund managers in diversified portfolios consisting of equities, government bonds, treasury bills, debt instruments. The portfolios grow and accumulate over the years and create a corpus for the investors depending.
The entire process of portfolio management is regulated by the PFRDA and the fund managers must comply with the approved investment guidelines.
In NPS, an investor can invest either in Auto choice or Active choice. In auto choice, the allocation of funds is based on a formula dependent on the investor’s age. In active choice, the allocation can be determined by the investor, but equity allocation is capped here.
During the retirement stage, the investor wants to secure his earnings post-retirement. NPS provides a source of income. Here, the size of the retirement benefit depends on the corpus created in the accumulation stage.
Upon retirement, 60% of the accumulated corpus can be withdrawn in a lump sum or in installments. The remaining 40% of the corpus must be spent to purchase annuity plans.
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