#WhatTheFinance – What Is The National Pension Scheme And How Does It Work?

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One of the great things about having a feedback page is that you get some great post ideas! I received a message from a reader asking me to break down the National Pension Scheme or the NPS. So without any further ado –

What is the National Pension Scheme?

The National Pension Scheme is a savings scheme wherein you can pay a certain amount of money into a pension account every month during the course of your working life. This money, in turn, will be invested on your behalf. When you reach retirement age (sixty years), the money becomes available to you, under certain conditions. Read More

Why I Absolutely Loathe ULIPs and Insurance Investment Schemes

I recently wrote about why ULIPs aren’t a great investment for my Rupee Rani column and I thought I’d write a quick post here talking about my own ULIP experience.

ULIPs or Unit Linked Insurance Plans combine insurance with investment. Basically, insurance companies collect money from you to invest on your behalf while they also give you life insurance cover. So, it’s like a Mutual Fund in a way, with an amount of money that is promised to your family in case you die (how cheerful!). I was made to invest in one back in 2012 because of my incredibly pushy bank branch manager and my inability to say no back then. I’ve only regretted it since. For starters, the money doesn’t come back to you until the policy period matures and retrieving it before it does is an incredible pain in the ass. So I’m stuck paying premiums until 2019 and will only receive the returns in 2022.

The second reason is something that I realized more recently. It is the amount of money that you will have to pay in “Charges” for your ULIP – basically, they’re the Insurance company’s expenses that are not invested on your behalf. They are exorbitant and more importantly, insurance companies are incredibly sneaky in the way that they portray them to be minor. Read More