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      National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF): Choose The Best

      Friday, April 7th, 2017 Amritesh 2 responses

      ELSS, NSC, PPF Comparsion
      FEATURES
      NSC
      ELSS
      PPF
      Tax Benefit
      U/S 80C
      Up to Rs 1.5 lacs      
      Up to Rs 1.5 lacs
      Up to Rs 1.5 lacs
      Minimum Contribution
      Rs 100
      Rs 500
      Rs 500
      Return on Investment
      7.8%
      Variable
      7.8% p.a
      Tenure
      5
      3 years
      15 years
      Tax on Return
      Taxable
      Tax Free
      Tax Free
      Maximum Contribution Limit
      No Limit
      No Limit
      Rs 1.5 lacs
      Tax on Interest/Return
      Taxable
      Exempted
      Exempted
      Risk
      Nil
      Moderate
      Nil
      In the above chart you will see the comparison between National Savings Certificate (NSC), Public Provident Fund (PPF) and Equity Linked Saving Scheme (ELSS). But I will also discuss some more points about the respective investment options so that you can chose the best investment for yourself. Also read my previous articles on PPF, NSC and ELSS to have a better idea.
       
       
       
       
       
      ADVANTAGES OF INVESTING IN NSC 

      Rate of Return on Investment is fixed.

      The tenure of Investment is much less than PPF.

      Compounding of Interest is done Annually which is similar to PPF. 

       
      DISADVANTAGES OF INVESTING IN NSC

      Rate of return is slightly lower than PPF and definitely much less as compared to ELSS over longer duration.

      The investment in NSC is eligible for Tax deduction U/S 80C. But the Interest received on maturity is Taxable.

      Investment may ensure you fixed returns but may not be able to negate the impact of inflation.

       
      ADVANTAGES OF INVESTING IN ELSS

      Past performance has shown that ELSS does provide better return (compared to NSC and PPF) on investment in medium and long term range.

      ELSS has a shortest lock in period of just 3 years unlike PPF and NSC.

      Return and Investment in ELSS is exempted from Tax.

      Does not have many riders on Investments apart from 3 year lock in period hence offers more flexibility.

       
      DISADVANTAGES OF INVESTING IN ELSS

      Rate of return is not assured and keeps on fluctuating as it is linked to Market Performance.

      Involves more risk as compared to NSC and PPF.

      Investment in under performing funds may ruin your returns.

       
      ADVANTAGES OF INVESTING IN PUBLIC PROVIDENT FUND

      Return on Investment is fixed and also higher as compared to some other schemes.

      Return and Investment in PPF is exempted from Tax.

      Carries less risk as compared to ELSS and since the interest rate is declared every year chances of earning higher interest always remains.

       
      DISADVANTAGES OF INVESTING IN PUBLIC PROVIDENT FUND

      Has a very long lock in period of 15 years.

      Rate of return may not be able to counter the effect of Inflation.

       
      THE BEST INVESTMENT OPTION

      Each Investment has got its own vices and virtues. Individuals themselves need to decide on the best investment option for them. It should be based on their future needs, ability to take risk, financial requirements and availability of resources to accomplish their future goals.
      However, in my opinion diversification of Investment is the best option. Since NSC and PPF are pretty similar to each other you can chose any one of them for investment (preferably PPF as return and benefits are viable) along with ELSS. This will help you to not only enjoy fixed return on Investment but also take advantage of market growth resulting in decent accumulation of funds.
       
      Some people might be tempted to invest in Kisan Vikas Patra (KVP) but it is not a viable investment option in my opinion. Read more about the scheme in the link provided below:

      Kisan Vikas Patra: All You Need To Know

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      Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.
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      2 Comments on "National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF): Choose The Best"

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      Sreedhar Bhattaram
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      Very useful Info!

      shanta
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