NPS vs SIP: which is best for you?

When planning for long-term financial goals, the National Pension System (NPS) and Mutual Fund Systematic Investment Plans (SIPs) are popular options. NPS is a government-backed retirement scheme offering fixed-income and equity exposure, but with limited liquidity. It’s ideal for disciplined, tax-efficient retirement savings. SIPs, on the other hand, provide flexible, market-linked investments across equity, debt, or hybrid funds, with no lock-in periods (except for ELSS).
SIPs generally deliver higher returns, ranging from 10–15% annually, depending on market conditions. NPS returns are more stable, averaging 8–10%, but with caps on equity exposure. Tax benefits are a strong point for NPS, with deductions under Section 80CCD and partial tax-free maturity. SIPs offer no upfront tax deductions, but long-term capital gains tax applies.
Choose NPS for retirement planning with moderate returns and tax savings. It suits salaried individuals aiming for a secure corpus. Opt for SIPs if you seek flexibility, higher returns, and goal-based wealth creation. Both plans cater to different needs—your choice depends on your financial goals and risk appetite.