NPS: Invest ₹10,000 monthly, retire with ₹3.82 Crores

We have always heard our parents say that we don’t have a Money Tree to keep plucking money from there for the expenses, especially when we are facing some hard times. But what if I tell you there is a Money Tree you can plant and keep plucking the fruits after retirement?

You can plant a small seed by starting an investment in NPS (National Pension Scheme), water it by investing a portion of your salary or your income every month, and keep adding fertilizers to the soil in the form of reviewing the investments allocation to yield the best fruit in the form of returns.

Here’s how you can plant this tree called NPS and as early bearing fruits claim the tax benefits.

Let’s say, you are a 25-year-old, recently got a nice permanent job and you are looking forward to investing funds to secure your retirement income.

By doing so, every month you can earn ₹76,566 which will help you easily live a comfortable life after retirement without being dependent on anyone.

How do the returns in NPS work, you may ask?

The withdrawal rules for NPS are that after retirement i.e. 60 years, you can withdraw 60% of the total sum as a tax-free lump sum amount, and for the remaining 40% you have to purchase an annuity plan.

During that time your funds get invested in the Asset class of Government Bonds, Equities, or Debt securities. You can choose how much you want to allocate in each class but there has to be a 25% allocation in debt securities. The returns from NPS are affected due to factors like asset allocation, market performance of securities, investment choices, duration of investments, etc. That’s why you should keep reviewing the investments in NPS at least once a year to optimize the returns.

Isn’t it a real Money tree? What do you think, put out your thoughts in the comments below!


Should the heading be Invest Rs 10000 MONTHLY ? or Annually ?


Hey @HiSubu,

It is monthly, investing ₹10,000 monthly. Thank you for helping correct the error.


If you open corporate NPS then you can save 30% income tax on your investee(Considering you are in 30% slab),

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Please paint a proper picture. In 35Y 3.82Cr wont have the same purchasing power. 76kpm after 35Y probably 5LPA in current standards even less. You cant live a decent life with that. So no its not a money tree in the making.

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How much maximum can self employed individual invest in Tier 1 and what is the tax implication on withdrawal?

Hello @amitava82,

There is no such limit of maximum amount that a self employed can invest in Tier I. Upto 60% of the lump sum amount withdrawn is exempt and remaining 40% for which annuity plan is purchased is taxed at slab rate under Other Sources head.

You can read more about the tax benefits, withdrawals and tax implications here.

Hope this clarifies!

Hey @ranton137,

I agree that the purchasing power won’t be the same in future but cultivating an investing habit now can secure your retirement income.

Hey @CA_Niyati_Mistry,

Yes, do that but your post is painting a rosy picture which is not the case and has nothing to do with cultivating a habit. Looks like you are a CA, isn’t there a fiduciary duty to not mislead people.

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It seems, NPS is still not considered seriously by govt.

Still EPF is given more weightage than NPS. Since both are retirement schemes,govt. should allow employees to switch from EPF to NPS … NPS gives equity linked option, gives higher chances to earn ROI then EPF. You can select options of agressive/non-agressive , giving you better control and transparency.

Cons is : There are very limited options available for withdrawals in NPS…that too with capings.

EPF gives you ROI in the range of 8-8.5%, where interest is again taxed if contribution crosses 2.5LPA…

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This seems like a good tax saving investment plan with very good return if no such limit and that too no tax on 60% withdrawn.

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