Rs 11000 SIP or NPS Which Investment Plan Gives Higher Returns After 25 Years?

If you are planning to invest SIP of ₹11,000 every month for the next 25 years then it’s a good sign that you’re already thinking smart about long-term wealth creation. But the big question is: Should you go with a SIP in mutual funds or invest in the National Pension System (NPS)?

Both choices have their own pros and cons but investing Rs 11000 SIP or NPS Which Investment Plan Gives Higher Returns after 25 years? Let’s break it down in simple form so that you can make the smart and wise decision according to your financial future.

What is SIP?

A Systematic Investment Plan (SIP) is a simple way to invest small amounts of money regularly like every month or three months into mutual funds. It helps build the habit of investing and savings, even if you’re a beginner. 

For example: If you invest ₹5,000 every month in an equity mutual fund through SIP, you will keep investing the same amount of money every month, no matter if the market goes up or down.

What is NPS?

The National Pension System (NPS) is a government supported saving scheme mainly for retirement. In this system, your money is invested in a mixture of equity, corporate bonds, and government securities. You also get some extra tax benefits under Section 80C and Section 80CCD(1B) as well. 

But there is a condition that NPS is locked until age of 60, and at the time of maturity, you must buy an annuity, which is a retirement income plan with no less than 40% of the total amount. 

₹11000 SIP vs NPS – What Will You Get After 25 Years?

SIP – Expected Growth

Let’s assume that you invested ₹11,000 each month in a good equity mutual fund with the help of SIP, then your:

• Total investment in 25 years: ₹33,00,000 
• Expected average return: 12% every year
• Expected collection: Around ₹1.92 crore

So, with a solid equity mutual fund, your SIP can grow to ₹1.8 to ₹2 crore over 25 years and that’s only because of the power of compounding.

NPS – Expected Growth

Now let’s assume that you invested ₹11,000 every month in a NPS, then your:

• Total investment in 25 years: ₹33,00,000
• Expected average return: 9% per year, which is the past NPS average
• Expected collection: Around ₹1.06 crore

But you need to keep in mind that, you can only withdraw 60% of this amount tax-free and the remaining 40% must be used to buy an annuity, which will give you a monthly pension. And that past will be taxable as income when you start to receive it. 

Rs 11000 SIP or NPS Which Investment Plan Gives Higher Returns Which Gives Better Returns?

• If your goal is to grow your wealth faster, then SIP can be a better option. In 25 years, SIPs in equity mutual funds have always given high returns. 
• If you want a disciplined, long-term retirement fund for a safe future ahead with tax benefits, then NPS is more suitable for you. 
• NPS is also good for keeping your retirement money safe and secure, in which you can’t take it out all at once. 

Key Difference: SIP vs NPS

Tax Benefits – A Quick Look 

• SIP: Profits over ₹1 lakh per year are taxed at 10% as long-term capital gains (LTCG). 
• NPS: It offers an extra ₹50,000 tax deduction under Section 80CCD(1B), along with ₹1.5 lakh under Section 80C. At the time of retirement, 60% of your collection is tax-free, and 40% is used for a pension, which is taxed as income. 

Which One Should You Choose?

It mainly depends on your goal:

• If you want to grow your wealth faster, then you can go with a SIP in a good equity fund. Because it usually gives higher returns over 25 years. 
• If you want a secure retirement plan with extra tax savings, then NPS is a good option to choose. 

Pro Tip: You can even mix both by splitting your ₹11,000 into ₹8,000 in SIP and ₹3,000 in NPS. That way, you get the growth potential of mutual funds and the retirement safety of NPS both at same time. 

Final Thoughts 

SIP and NPS both have their own unique advantages and disadvantages, A ₹11,000 SIP over 25 years can possibly give you a much larger collection at the end than NPS, which makes it a great option for wealth creation.

But NPS is a solid retirement plan too. It is a safe, disciplined, and tax-saving tool. The best strategy is to balance both plans based on your age, risk taking capability, and financial goals for the long-term.

FAQs

Which is safer – SIP or NPS?

Usually, NPS is safer as it invests in a mix of equity and bonds and also it is backed by the government. 

Can I withdraw money anytime in SIP and NPS?

SIPs provide full flexibility while investing, in which you can take out money whenever you want. But NPS is locked in till age 60, with only limited early withdrawal allowed. 

Which gives better tax benefits – SIP or NPS?

NPS offers more savings in taxes, in which an extra ₹50,000 deduction over and above Section 80C. And SIPs are taxed as capital gains when you sell it. 

What is the average return for SIP vs NPS?

SIPs usually give 10 to 15% returns per year, whereas NPS gives 8 to 20%, which depends on how your funds are allocated. 

Can I invest in both SIP and NPS together?

Yes. Many smart investors split their monthly savings between both to enjoy the benefits of both growth and retirement.