Bank FD’s have always been the go-to investment option for majority of Indians till date. But thanks to the recent demonetization all banks are flush with heavy money and hence have significantly cut their deposit rates. Where one was getting Rs.10000 (pre-tax) for every Rs.1 lakh deposited for a year a few years ago, the return now is hardly Rs.7000. That’s how drastic the rates have fallen. If you’re a worried investor like most of the countrymen, then you must be looking for alternate investment ideas to cut above the inflation rate.
There are obviously plenty of other options, Equities, Mutual Funds, Government Bonds, the grand old PPF and you might even consider putting a lakh or two in one (or more) of the payments bank too. It obviously makes sense to open a savings bank account in a payments bank which earns 7-8% interest than to open a closed type FD in a conventional bank and receive only like 7%.
NPS TIER 2 OPTION
If you belong to the salary class and have joined your organization in the recent few years, you might already be having a NPS account for your retirement savings. That’s obviously a NPS Tier 1 account, which is mostly illiquid and will only be available to you on your retirement. There’s also another NPS account called NPS Tier 2, which is completely liquid. In other terms, you can withdraw your money when ever you want, almost like your savings account, barring the charges associated with the withdrawals.
How to open a NPS Tier 2 account
While applying for a NPS account when you joined your company, you might also have had the option to register for the optional Tier 2 account. Like most of us, you might not have chose that option. Worry not as you can apply online any time later and better, you do not even need to inform your organization about it.
You can simply visit the eNPS site and follow the simple instructions to apply online. Just give your PRAN number, enter your DOB, mobile, Nomination, your bank details, make a minimum payment of Rs.1000 and submit it online.
Note that a minimum of Rs.1000 has to be contributed during the account opening and subsequently a minimum of Rs.250 is required per contribution.
After submitting the form, take a printout of it, sign it and courier it to the PFRDA address mentioned in the form. News is that even this one bit of paper work will be eliminated in the future using Aadhar base e-verification.
There’s a place for your organization to affix its stamp. You can safely skip that and send the form with just your signature. I’ve done the same and my Tier 2 has been running since 6 months without any issue. Once PFRDA receives your form, your Tier 2 will be activated for which you will receive a confirmation email.
From then you can invest in Tier 2 like you do to your savings bank account. The charges are also very minimal compared to conventional Mutual funds. For example, a Mutual fund will charge you any where between 2-3% of your contribution, which is a minimum Rs.2000 per Rs.1 lakh. In comparison, NPS charges are abysmal at around Rs.58 per Rs.1 lakh.