NPS vs Fixed Deposit: Which Scheme is Better to Invest?
NPS vs Fixed Deposit The National Pension System is a voluntary pension scheme that lets you plan for your retirement by investing a fixed amount every month. As it belongs to the EEE category, it is a tax-free investment that attracts many investors each year. Ho wever, the NPS with drawal policies might not suit everyone. Fixed deposit generates interest income at a fixed interest rate. A one-time lump sum amount needs to be deposited to reap high returns at maturity. The benefit with fixed deposits is that you don’t have to wait for a long time to withdraw the deposits. Some banks and financial institutions allow you to withdraw the entire amount post completion of 3 months from the deposit date. With FDs, you can also choose to withdraw the interest periodically as per your financial needs. Some of the basic differences between these instruments are highlighted in the below table: Features NPS Fixed Deposits Investment method A fixed sum needs to be paid every month in the N