The hidden gem

The National Pension System makes me sad. Well, not the NPS itself, but how little it is being used

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Of all the investment options available to the Indian saver, the NPS is the most underutilised. The contrast between how well-suited the NPS is for every saver and how little it is used is the largest among all investment classes.

The NPS should be the primary long-term investment of every saver. Once you are done with your emergency money, term insurance and health cover, it should be considered the first among the rest. Only when the possibilities of the NPS are exhausted, or for those needs that the NPS cannot fulfil, should you turn to mutual funds or equity. Yet, hardly anyone does this. If you ask a thousand mutual fund investors whether they use the NPS on a discretionary basis (meaning, not counting those who have the NPS at their workplace), you may find one or two who do.