National Pension Scheme (NPS) is an investment avenue for saving tax, building retirement corpus and pension. It provides additional tax benefit over and above Rs. 1,50,000/- limit offered under section 80C. NPS invests maximum of 75% of the portfolio in direct equity (stock market). Many investors look at the market fluctuations and wonder when they should start investing into NPS for the current financial year.
However, there is no need to time the market as NPS is a long-term investment. Like Mutual Fund SIPs, you can also start Systematic Investment Plan (SIP) in NPS. The scheme very much offers this facility now a day.
Why start SIP in NPS?
- No need to time the market. Your purchase cost will be averaged out as you buy both at low and high markets.
- Invest small amount every month/ quarter/ half yearly/ annually from your salary/income. No need to gather lump sum money. You can contribute any amount between Rs. 500/- to Rs. 1,00,000/- per instance in SIP.
- Invest fixed amount every month, so you can plan your monthly budget.
- Hassle free, once SIP is set money goes automatically for investment. So, tax savings for the year is taken case.
- No last-minute investment. Not relaying on your luck that at the last minute wherever is the market you have to invest.
- Power of compounding money works better as you do not miss out anything and also use rupee cost averaging.
What you need to set NPS SIP?
- Live NPS Account with your updated mobile number and email address.
- Bank account linked with NPS and having active internet banking. There are only certain banks empanelled, check if your bank is empanelled for this or not.
- Once SIP is set successfully, it will debit the contribution at the set frequency automatically.
