
<p>The Reserve Bank of India defines non-performing assets (NPAs) in India as any advance or loan that has been past due for more than 90 days. To better align with worldwide practices, the RBI established the 90-day overdue criterion for recognizing NPAs, which became effective with the fiscal year ending March 31, 2004. Non-performing assets are classified into different classes based on how long they have been an NPA. Let’s break down what exactly an NPA is in the financial world, the different types of NPAs, how they impact the banking sector, gross NPA vs Net NPA, and how to reduce NPAs in banks.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Is_NPA_in_Banking"></span>What Is NPA in Banking?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>By now, you must be familiar with what an asset is; its definition, functions, benefits, and how it works with other financial aspects. In simple words, an asset is anything that you can own. A loan is an asset to banks since the interest you pay on these loans is one of the bank&#8217;s most important sources of revenue. &nbsp;<br>&nbsp;<br>When you, as a retail or corporate customer, are unable to pay the interest, the asset becomes &#8216;non-performing&#8217; for the bank because it is not generating anything. As a result, the RBI has classified NPAs as assets that no longer generate income for the bank.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Types_and_Classification_of_NPAs"></span>Types and Classification of NPAs&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>NPAs are categorized according to the duration for which they have been in the NPA category.&nbsp;</p>



<ul class="wp-block-list">
<li><strong>Substandard Assets</strong>: A substandard asset is one that has been classed as an NPA for less than or equal to 12 months. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Doubtful assets</strong>: A doubtful asset has been an NPA for more than 12 months. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Loss Assets</strong>: A loss asset is one that is considered uncollectable and of such minimal value that it is no longer viable to treat it as a bankable asset. However, it may still retain some residual recovery value, which is why it hasn’t been fully written off from the bank’s books. </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Gross_NPA_vs_Net_NPA_Key_Differences"></span>Gross NPA vs Net NPA: Key Differences&nbsp;<span class="ez-toc-section-end"></span></h2>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>Characteristic&nbsp;</td><td>Gross NPA (GNPA)&nbsp;</td><td>Net NPA (NNPA)&nbsp;</td></tr><tr><td><strong>Definition</strong>&nbsp;</td><td>Total value of defaulted loans (unpaid principal + interest).&nbsp;</td><td>GNPA minus provisions for bad debts.&nbsp;</td></tr><tr><td><strong>Calculation</strong>&nbsp;</td><td>Sum of all defaulted loans / gross advances.&nbsp;</td><td>(GNPA – provisions) / gross advances.&nbsp;</td></tr><tr><td><strong>Default period</strong>&nbsp;</td><td>Recognized after the grace period ends.&nbsp;</td><td>Calculated immediately (no grace period).&nbsp;</td></tr><tr><td><strong>Causes</strong>&nbsp;</td><td>Loan defaults due to economic factors, poor policies, natural calamities, etc.&nbsp;</td><td>Derived from GNPA after accounting for necessities.&nbsp;</td></tr><tr><td><strong>Actual loss</strong>&nbsp;</td><td>Represents the total outstanding defaulted amount.&nbsp;</td><td>Reflects real loss after provisions (what the bank may not be able to recover).&nbsp;</td></tr><tr><td><strong>Impact</strong>&nbsp;</td><td>Reduces asset quality; affects your trust.&nbsp;</td><td>Directly impacts liquidity &amp; profitability (lower cash flow).&nbsp;</td></tr></tbody></table></figure>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Major_Causes_of_NPAs_in_Indian_Banks"></span>Major Causes of NPAs in Indian Banks&nbsp;<span class="ez-toc-section-end"></span></h2>



<ol start="1" class="wp-block-list">
<li><strong>Economic slowdown</strong>: A sluggish economy reduces profitability for businesses, limiting their ability to service debt. During economic downturns, sectors including power, infrastructure, real estate, and manufacturing encounter cash flow problems, leading to bank loan defaults. </li>
</ol>



<ol start="2" class="wp-block-list">
<li><strong>Aggressive loan practices</strong>: During the mid-2000s boom, banks, notably public sector banks (PSBs), engaged in aggressive lending, often without conducting proper due diligence. Many loans were made to huge firms based on expected earnings and future growth, rather than present performance or collateral security. </li>
</ol>



<ol start="3" class="wp-block-list">
<li><strong>Political and crony capitalism</strong>: Political influence, particularly in PSBs, has resulted in loans being granted under duress to organizations with a bad track record. Crony capitalism, in which businessmen obtain big loans through political connections, has played a significant role in defaults and deliberate defaulters. </li>
</ol>



<ol start="4" class="wp-block-list">
<li><strong>Delay in project implementation</strong>: Land acquisition concerns, regulatory impediments, litigation, and environmental clearances are all common challenges for infrastructure projects in India. These delays raise project costs and disrupt financial flow, resulting in loan defaults. </li>
</ol>



<ol start="5" class="wp-block-list">
<li><strong>Global factors and commodity prices</strong>: Global market fluctuations and variable commodity prices (particularly steel, oil, and coal) have had an impact on export-oriented and core sectors. These price shocks reduce revenue, making it difficult for borrowers to service loans. </li>
</ol>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_NPAs_Impact_the_Economy_and_Banking_Sector"></span>How NPAs Impact the Economy and Banking Sector&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The effect of growing NPAs can be as follows:&nbsp;</p>



<ul class="wp-block-list">
<li>Rising NPAs damage the bank&#8217;s reputation, causing the public to lose trust in banks. You may withdraw your deposits, causing banks to have liquidity challenges. </li>
</ul>



<ul class="wp-block-list">
<li>The shortage of liquidity prohibits banks from lending to other productive sectors of the economy. The reduction in investment may cause the economy to stall, resulting in unemployment, inflation, a bear market, and so on. </li>
</ul>



<ul class="wp-block-list">
<li>To retain their profit margins, banks will be obliged to raise interest rates, further harming the economy. </li>
</ul>



<p>NPAs erode bank profitability and lending capacity. When loans are not returned, banks are required to set aside provisions, reducing money available for new credit. This has implications for corporate growth, investment, and overall economic activity. High NPA levels also weaken your confidence in investing and raise your borrowing costs throughout the financial system, reducing credit availability to both you and companies. Over time, this can limit economic growth and place a strain on government budgets, particularly if public-sector banks require subsidies or recapitalization.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Strategies_to_Reduce_NPAs_in_Banks"></span>Strategies to Reduce NPAs in Banks&nbsp;<span class="ez-toc-section-end"></span></h2>



<ol start="1" class="wp-block-list">
<li>Improving credit appraisal and risk management. </li>
</ol>



<p>Banks must use a more rigorous and standardized method when examining loan applications. AI and Big Data analytics can improve credit profiles and payback behaviour. Risk-based pricing and exposure restrictions should be meticulously observed.&nbsp;</p>



<ol start="2" class="wp-block-list">
<li>Improving the Role of Credit Information Companies. </li>
</ol>



<p>The increased usage of credit information bureaus such as CIBIL and Experian can assist banks in more correctly assessing the borrower’s creditworthiness. The regular sharing of data among financial organizations is crucial.&nbsp;</p>



<ol start="3" class="wp-block-list">
<li>Accountability for Loan Sanctioning. </li>
</ol>



<p>It is critical to improve transparency and accountability in the loan approval process, particularly in PSBs. Bank officials must be held accountable for the negligent or biased approval of loans.&nbsp;</p>



<ol start="4" class="wp-block-list">
<li>Timely Monitoring and Auditing </li>
</ol>



<p>Post-disbursement monitoring should be tightened. Banks should deploy dedicated teams for the continuous evaluation of large projects and use technology like satellite imagery for infrastructure and agricultural loans to verify progress.&nbsp;</p>



<ol start="5" class="wp-block-list">
<li>Asset Quality Review and Early Warning Systems. </li>
</ol>



<p>The Reserve Bank of India (RBI) should periodically conduct Asset Quality Reviews (AQRs), and banks must establish Early Warning Systems (EWS) to identify stress in accounts before they become NPAs.&nbsp;</p>



<ol start="6" class="wp-block-list">
<li>Strengthening the Insolvency and Bankruptcy Code (IBC) </li>
</ol>



<p>The IBC (2016) has improved recovery timelines, but challenges remain due to judicial delays and low-resolution rates. The government must address bottlenecks in the National Company Law Tribunal (NCLT) and improve creditor protection mechanisms.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Real-World_Example_of_NPA_in_India"></span>Real-World Example of NPA in India&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><em>The Kingfisher Airline Case</em>&nbsp;<br>Kingfisher Airlines loan default case was one of India&#8217;s most well-known NPA instances. The airline defaulted on loans of over ₹9,000 crore from the group of Indian banks led by SBI. Due to operational losses and mounting debt, the company was unable to repay its loans; hence, the accounts were classed as NPAs. This high-profile default had a significant influence on the banking system, resulting in legal fights, asset seizures, and tightened credit risk assessments. The case triggered a public debate over accountability and debt recovery in India&#8217;s banking system.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Conclusion"></span>Conclusion&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The rising flood of NPAs in India is the result of a mix of macroeconomic issues, poor governance, and structural flaws in the banking industry. While numerous projects have been launched to address the issue, a long-term solution would call for a multidimensional approach that includes changes to credit evaluation, monitoring, legal recovery, and governance structures. With ongoing alertness, proactive policies, and institutional resilience, India can effectively address the NPA problem and provide the groundwork for a strong, inclusive, and future-ready banking system.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs_on_Non-Performing_Assets"></span>FAQs on Non-Performing Assets<span class="ez-toc-section-end"></span></h2>



<div class="schema-faq wp-block-yoast-faq-block"><div class="schema-faq-section" id="faq-question-1753954183694"><strong class="schema-faq-question">What does NPA stand for in banking?</strong> <p class="schema-faq-answer">NPA is an abbreviation for Non-Performing Asset, which refers to a loan or advance in which the borrower fails to repay interest or principal for at least 90 days. Banks label such assets as NPAs because they no longer generate income, reducing profitability. NPAs imply credit risk and low asset quality, forcing banks to set aside provisions, harming their financial health and lending capacity.</p> </div> <div class="schema-faq-section" id="faq-question-1753954192026"><strong class="schema-faq-question">What are the 3 types of NPAs?</strong> <p class="schema-faq-answer">The three types of NPAs are standard assets, doubtful assets, and loss assets, classified according to how long the loan has been due and whether they are recoverable or not.</p> </div> <div class="schema-faq-section" id="faq-question-1753954202093"><strong class="schema-faq-question">What is the difference between gross NPA and net NPA?</strong> <p class="schema-faq-answer">Gross NPA is the total value of defaulted loans without accounting for provisions. Net NPA deducts provisions (money set aside for bad debts) from Gross NPA, showing the actual risk exposure. While Gross NPA indicates overall bad loans, Net NPA reveals the bank’s real loss after recoverable amounts, making it a stricter measure of financial health.</p> </div> <div class="schema-faq-section" id="faq-question-1753954219129"><strong class="schema-faq-question">What are the common reasons for high NPAs in Indian banks?</strong> <p class="schema-faq-answer">High NPAs in Indian banks stem from wilful defaults, economic slowdowns, poor credit appraisal, and sector-specific crises (e.g., infrastructure, steel). Weak recovery mechanisms, political interference in lending, and fraudulent practices exacerbate the issue. Additionally, natural calamities (affecting agriculture) and global shocks (like COVID-19) disrupt repayments, straining banks’ asset quality and profitability.</p> </div> </div>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_Is_NPA_in_Banking" >What Is NPA in Banking?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#Types_and_Classification_of_NPAs" >Types and Classification of NPAs&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Gross_NPA_vs_Net_NPA_Key_Differences" >Gross NPA vs Net NPA: Key Differences&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Major_Causes_of_NPAs_in_Indian_Banks" >Major Causes of NPAs in Indian Banks&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#How_NPAs_Impact_the_Economy_and_Banking_Sector" >How NPAs Impact the Economy and Banking Sector&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-6" href="#Strategies_to_Reduce_NPAs_in_Banks" >Strategies to Reduce NPAs in Banks&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-7" href="#Real-World_Example_of_NPA_in_India" >Real-World Example of NPA in India&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#Conclusion" >Conclusion&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#FAQs_on_Non-Performing_Assets" >FAQs on Non-Performing Assets</a></li></ul></nav></div>


Non-Performing Assets (NPA): Definition, Types & Examples 


<p>In the world of investing, performance measurement is crucial. Whether you&#8217;re managing a personal portfolio or overseeing an institutional fund, understanding how well your investments are doing can shape your future decisions. Among the many metrics available, <em>absolute return</em> is a widely used and straightforward measure. It tells you, in plain numbers, how much your investment has gained or lost over a period of time — without comparing it to any benchmark or market index.&nbsp;</p>



<p>This blog serves as a comprehensive guide to understanding absolute return — what it is, how it differs from other measures like relative return, and when investors should use it. We&#8217;ll also explore various strategies, examples, and its application in mutual funds and portfolio management.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Understanding_Absolute_Return_in_Investing"></span>Understanding Absolute Return in Investing&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><strong>What is Absolute Return?</strong>&nbsp;</p>



<p>Absolute return refers to the total gain or loss an investment achieves over a specified period. It is expressed as a percentage and is not compared to any other benchmark. For example, if you invested ₹1,00,000 in a mutual fund and it grew to ₹1,10,000 in one year, the absolute return is 10%.&nbsp;</p>



<p><strong>Formula to Calculate Absolute Return:</strong>&nbsp;</p>



<p>Absolute Return = (Current Value−Initial Investment Initial Investment) ×100\text {Absolute Return} = \left (\frac {\text{Current Value} &#8211; \text {Initial Investment}}{\text{Initial Investment}} \right) \times 100Absolute Return = (Initial Investment Current Value−Initial Investment​) ×100&nbsp;&nbsp;</p>



<p><strong>Example:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>Initial Investment = ₹1,00,000 </li>
</ul>



<ul class="wp-block-list">
<li>Current Value = ₹1,25,000 </li>
</ul>



<ul class="wp-block-list">
<li>Absolute Return = (125000 &#8211; 100000) / 100000) × 100 = <strong>25%</strong> </li>
</ul>



<p><strong>Why It Matters:</strong>&nbsp;<br>Absolute return gives a clear idea of how your investment is performing in terms of actual profit or loss, irrespective of the market’s performance.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Absolute_Return_vs_Relative_Return_Key_Differences"></span>Absolute Return vs Relative Return: Key Differences&nbsp;<span class="ez-toc-section-end"></span></h2>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td><strong>Metric</strong>&nbsp;</td><td><strong>Absolute Return</strong>&nbsp;</td><td><strong>Relative Return</strong>&nbsp;</td></tr><tr><td><strong>Definition</strong>&nbsp;</td><td>Measures total return without comparison&nbsp;</td><td>Measures return relative to a benchmark (like Nifty 50)&nbsp;</td></tr><tr><td><strong>Focus</strong>&nbsp;</td><td>Pure performance&nbsp;</td><td>Outperformance or underperformance&nbsp;</td></tr><tr><td><strong>Example</strong>&nbsp;</td><td>12% return on ₹1 lakh in 1 year&nbsp;</td><td>12% return vs 10% Nifty = +2% relative return&nbsp;</td></tr><tr><td><strong>Use Case</strong>&nbsp;</td><td>Goal-based investing, fixed targets&nbsp;</td><td>Professional fund comparison, benchmarking&nbsp;</td></tr></tbody></table></figure>



<p><strong>Key Insight:</strong>&nbsp;<br>Absolute return is simple and best suited for individual investors, while relative return is commonly used by fund managers to benchmark performance.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_Absolute_Return_Strategies_Work"></span>How Absolute Return Strategies Work&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><strong>Absolute return strategies</strong> aim to generate positive returns regardless of market conditions. These are often employed by hedge funds, asset managers, or active portfolio managers.&nbsp;</p>



<p><strong>Common Techniques:</strong>&nbsp;</p>



<ol start="1" class="wp-block-list">
<li><strong>Long-Short Equity</strong> – Buy undervalued stocks and short overvalued ones. </li>
</ol>



<ol start="2" class="wp-block-list">
<li><strong>Arbitrage</strong> – Exploit price differences across markets. </li>
</ol>



<ol start="3" class="wp-block-list">
<li><strong>Global Macro</strong> – Use macroeconomic trends to position assets. </li>
</ol>



<ol start="4" class="wp-block-list">
<li><strong>Market Neutral</strong> – Offset market risk by balancing long and short positions. </li>
</ol>



<p><strong>Portfolio Diversification:</strong>&nbsp;<br>These strategies focus on minimizing volatility and maximizing risk-adjusted returns.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Benefits_of_Absolute_Return_Approach"></span>Benefits of Absolute Return Approach&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><strong>1. Clarity in Investment Performance</strong>&nbsp;</p>



<p>It directly shows the monetary gain or loss on your capital.&nbsp;</p>



<p><strong>2. No Benchmark Dependency</strong>&nbsp;</p>



<p>Investors aren’t bound to compare returns with indices, making it easier for goal-based investing.&nbsp;</p>



<p><strong>3. Useful for Short-Term Goals</strong>&nbsp;</p>



<p>Absolute return works better for short-to-medium investment horizons, like saving for a wedding, a car, or vacation.&nbsp;</p>



<p><strong>4. Flexibility in Strategy</strong>&nbsp;</p>



<p>This approach can use both traditional and alternative strategies to generate positive returns in all types of markets.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Role_of_Absolute_Return_in_Mutual_Funds"></span>Role of Absolute Return in Mutual Funds&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Mutual funds also report absolute returns to show how a scheme has performed over time. These figures are most helpful when:&nbsp;</p>



<ul class="wp-block-list">
<li>Holding period is <strong>less than one year</strong> </li>
</ul>



<ul class="wp-block-list">
<li>Investors want to know the <strong>flat return</strong> without compounding </li>
</ul>



<ul class="wp-block-list">
<li>Comparing funds across similar time frames </li>
</ul>



<p><strong>Example:</strong>&nbsp;<br>A fund returns 8% in 9 months — this is its absolute return. To compare across different periods, CAGR (Compound Annual Growth Rate) is better.&nbsp;</p>



<p><strong>Absolute Return Mutual Funds:</strong>&nbsp;<br>These schemes use hedging, arbitrage, or dynamic allocation to deliver consistent returns — especially in volatile or flat markets.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Limitations_and_Considerations_of_Absolute_Return_Investing"></span>Limitations and Considerations of Absolute Return Investing&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><strong>1. Ignores Time Period</strong>&nbsp;</p>



<p>Absolute return does not reflect <em>how long</em> the investment took to achieve the return. An 8% return over 2 years isn’t the same as 8% in 3 months — but absolute return treats them equally.&nbsp;</p>



<p><strong>2. No Benchmarking</strong>&nbsp;</p>



<p>In the absence of market comparison, it’s harder to know if your investment did better or worse than others.&nbsp;</p>



<p><strong>3. Doesn’t Consider Risk</strong>&nbsp;</p>



<p>Absolute returns don’t tell you about volatility or downside risk taken to earn that return.&nbsp;</p>



<p><strong>Conclusion:</strong>&nbsp;<br>Absolute return needs to be paired with other metrics like CAGR, Sharpe Ratio, or standard deviation for a fuller picture.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="When_Should_Investors_Use_Absolute_Return_Strategies"></span>When Should Investors Use Absolute Return Strategies?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Absolute return is useful when:&nbsp;</p>



<ul class="wp-block-list">
<li>You want <strong>stable returns</strong> irrespective of market direction </li>
</ul>



<ul class="wp-block-list">
<li>You’re investing in <strong>short-duration instruments</strong> like FDs, debt funds, etc. </li>
</ul>



<ul class="wp-block-list">
<li>Evaluating <strong>single-period performance</strong> </li>
</ul>



<ul class="wp-block-list">
<li>Assessing performance of <strong>hedged mutual funds</strong> or <strong>alternative investments</strong> </li>
</ul>



<p><strong>Best suited for:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>Retirees looking for capital preservation </li>
</ul>



<ul class="wp-block-list">
<li>Conservative investors </li>
</ul>



<ul class="wp-block-list">
<li>Goal-based short-to-medium term investors </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Conclusion"></span>Conclusion&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Absolute return is a fundamental concept in investment analysis, ideal for understanding the real, raw performance of an asset. It’s simple, benchmark-free, and directly tells investors how their money has grown or shrunk. Whether you&#8217;re a new investor measuring the growth of your fixed deposit, or a seasoned professional analyzing hedge fund performance, absolute return gives a clear, non-relative metric for success.&nbsp;</p>



<p>However, it should not be viewed in isolation. Understanding the time period, risks undertaken, and comparison with other options is also crucial. For a holistic investment decision, pair absolute return with metrics like CAGR, risk ratios, and relative return when appropriate.&nbsp;</p>



<p>By mastering absolute return, investors can build a better understanding of their portfolio’s real-world performance — and make more informed decisions moving forward.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs_for_Absolute_Return_in_Investing"></span>FAQs for Absolute Return in Investing<span class="ez-toc-section-end"></span></h2>



<div class="schema-faq wp-block-yoast-faq-block"><div class="schema-faq-section" id="faq-question-1753856883882"><strong class="schema-faq-question">What does absolute return mean in investing?</strong> <p class="schema-faq-answer">It refers to the total percentage gain or loss on an investment, regardless of benchmarks.</p> </div> <div class="schema-faq-section" id="faq-question-1753856893627"><strong class="schema-faq-question">How is absolute return different from relative return?</strong> <p class="schema-faq-answer">Absolute return is your raw return. Relative return compares it to a benchmark or market index.</p> </div> <div class="schema-faq-section" id="faq-question-1753856906258"><strong class="schema-faq-question">What are absolute return strategies used by investors?</strong> <p class="schema-faq-answer">Strategies include long-short equity, arbitrage, global macro, and market-neutral.</p> </div> <div class="schema-faq-section" id="faq-question-1753856917394"><strong class="schema-faq-question">Are absolute return funds safe during market downturns?</strong> <p class="schema-faq-answer">They aim to deliver positive returns even in down markets, but are not entirely risk-free.</p> </div> <div class="schema-faq-section" id="faq-question-1753856930798"><strong class="schema-faq-question">How do mutual funds calculate absolute return?</strong> <p class="schema-faq-answer">By comparing current NAV with purchase NAV using the formula mentioned above.</p> </div> <div class="schema-faq-section" id="faq-question-1753856944195"><strong class="schema-faq-question">When should an investor consider absolute return investing?</strong> <p class="schema-faq-answer">During volatile markets, for conservative investing goals, or when benchmarking isn’t necessary.</p> </div> </div>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#Understanding_Absolute_Return_in_Investing" >Understanding Absolute Return in Investing&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#Absolute_Return_vs_Relative_Return_Key_Differences" >Absolute Return vs Relative Return: Key Differences&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#How_Absolute_Return_Strategies_Work" >How Absolute Return Strategies Work&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Benefits_of_Absolute_Return_Approach" >Benefits of Absolute Return Approach&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#Role_of_Absolute_Return_in_Mutual_Funds" >Role of Absolute Return in Mutual Funds&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-6" href="#Limitations_and_Considerations_of_Absolute_Return_Investing" >Limitations and Considerations of Absolute Return Investing&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-7" href="#When_Should_Investors_Use_Absolute_Return_Strategies" >When Should Investors Use Absolute Return Strategies?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#Conclusion" >Conclusion&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#FAQs_for_Absolute_Return_in_Investing" >FAQs for Absolute Return in Investing</a></li></ul></nav></div>


What is Absolute Return? A Complete Guide for Smart Investors 


<p>Imagine having merely ₹500 a month to ensure your family&#8217;s future. The value of life insurance lies in its straightforward promise to safeguard your loved ones no matter what life throws at them. Where do you even start, though, with phrases like &#8220;term plans&#8221; and &#8220;ULIPs&#8221; all over the place?  This blog explains everything in simple terms, regardless of whether you&#8217;re a first-time buyer or simply trying to understand your options. Let’s discuss what life insurance is, how it works, the different policies available, its features, the options available in India, and when you should buy it.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_is_Life_Insurance"></span>What is Life Insurance?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Life insurance is a financial agreement between you (the policyholder) and an insurance company, where the insurer promises to provide a fixed sum of money to your family or nominee in the event of your death. It offers financial protection and peace of mind for your loved ones. In exchange for your premium payments, the insurer pays your family a lump sum payment, or death benefit, in the event that you die within the policy&#8217;s term. It guarantees your loved ones&#8217; financial stability even while you are not around. Some of its key points are:&nbsp;</p>



<ul class="wp-block-list">
<li>Risk coverage for sudden/untimely death. </li>
</ul>



<ul class="wp-block-list">
<li>Optional investment and savings components (in certain policies). </li>
</ul>



<ul class="wp-block-list">
<li>Benefits from taxes under Sections 80C and 10(10D). </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_Does_Life_Insurance_Work"></span>How Does Life Insurance Work?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>To simplify the process,&nbsp;</p>



<ol start="1" class="wp-block-list">
<li><strong>Purchase a policy</strong>: Pay premiums for the plan of your choice (term, endowment, ULIP, etc.). </li>
</ol>



<ol start="2" class="wp-block-list">
<li><strong>Policy term</strong>: The duration of coverage is predetermined, such as 10–30 years. </li>
</ol>



<ol start="3" class="wp-block-list">
<li><strong>Claim payout</strong>: Your nominee will get the amount guaranteed in case of your demise within the term. </li>
</ol>



<ol start="4" class="wp-block-list">
<li><strong>Survival benefits</strong>: If you outlive the term, several plans offer benefits related to maturity. </li>
</ol>



<p>For example, for a healthy 30-year-old, a ₹1 crore term plan might only cost ₹500 per month.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Types_of_Life_Insurance_Policies"></span>Types of Life Insurance Policies&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>There are several types of life insurance policies available in India and understanding how they are classified can help you decide which one to pick. These are explained below:&nbsp;</p>



<ol start="1" class="wp-block-list">
<li><strong>Term life insurance</strong>: This is the most common, simple, and straightforward type of life insurance policy. Here, the nominee will receive the death benefits in case the policyholder passes away during the term of the policy. These start at just ₹500 per month. </li>
</ol>



<ol start="2" class="wp-block-list">
<li><strong>Whole life insurance</strong>: As the name suggests, whole life insurance insures your entire life. The policy is for 99 years, and it offers fixed premiums and guaranteed benefits. </li>
</ol>



<ol start="3" class="wp-block-list">
<li><strong>Child insurance</strong>: This type of policy acts as a savings net for your children’s future. This can help support their education, marriage, and other financial goals, thus giving you a sense of security. </li>
</ol>



<ol start="4" class="wp-block-list">
<li><strong>Money-back policy</strong>: This is a type of life insurance that provides guaranteed returns. Unlike other life insurance products, you are given survival benefits if the term lasts. You finally get the remaining corpus with any bonuses once the policy matures. </li>
</ol>



<ol start="5" class="wp-block-list">
<li><strong>Retirement/ pension plans</strong>: These are specially curated to help you build wealth for your retirement days, ensuring financial stability in the years you won’t be working. These encourage saving and investing for the long term, helping you accumulate your wealth. </li>
</ol>



<ol start="6" class="wp-block-list">
<li><strong>Endowment insurance plans</strong>: These come with dual benefits: life insurance and wealth creation. These are great for you if you want secure, guaranteed returns and the advantages of life insurance protection. </li>
</ol>



<ol start="7" class="wp-block-list">
<li><strong>Unit-linked insurance plans (ULIPs)</strong>: These offer life insurance, as well as allowing you to grow your wealth through some market-linked returns from systematic investments. These let you select among various options based on your risk tolerance, investment horizon, and goals. They come with a five-year lock-in period. </li>
</ol>



<ol start="8" class="wp-block-list">
<li><strong>Group life insurance</strong>: This is a type of life insurance made for a group of people working in the same organization. Organizations usually offer these to help safeguard their employees at quite reasonable costs. Many group life insurance policies are included under employee benefit packages, which means that your employer contributes to the cost. This helps reduce the strain on your insurance plans. </li>
</ol>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Benefits_of_Having_Life_Insurance"></span>Benefits of Having Life Insurance&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Life insurance comes with several benefits. Let’s understand them.&nbsp;</p>



<ul class="wp-block-list">
<li><strong>Family financial security</strong>: Offers a financial safety net to replace lost income and support your loved ones in your absence. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Debt protection</strong>: Provides coverage for home, auto, and other loan repayments. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Tax savings</strong>: Section 80C allows for premium deductions, while Section 10(10D) allows for tax-free payouts. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Retirement planning</strong>: via ULIPs and endowments.  </li>
</ul>



<ul class="wp-block-list">
<li><strong>Peace of mind</strong>: No concerns over the future of dependents. </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Key_Features_of_Life_Insurance_Plans"></span>Key Features of Life Insurance Plans&nbsp;<span class="ez-toc-section-end"></span></h2>



<ul class="wp-block-list">
<li><strong>Assured sum</strong>: The death benefit amount is assured to the nominee. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Policy term</strong>: The length of coverage is known as the policy term. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Riders</strong>: Extras like as coverage for accidental death or catastrophic illness. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Surrender value</strong>: A partial reimbursement for early cancellation. </li>
</ul>



<ul class="wp-block-list">
<li><strong>Grace period</strong>: A window for late payments, typically lasting 15 to 30 days. </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Choosing_the_Best_Life_Insurance_Policy_in_India"></span>Choosing the Best Life Insurance Policy in India&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>There is a process to follow to find the best life insurance policy for you.&nbsp;</p>



<ul class="wp-block-list">
<li>Evaluate your needs, including any dependents, debts, and income structure. </li>
</ul>



<ul class="wp-block-list">
<li>Examine the differences between term, endowment, and ULIP plans. </li>
</ul>



<ul class="wp-block-list">
<li>Verify the claim settlement ratio of the insurer (<a href="https://economictimes.indiatimes.com/wealth/insure/life-insurance/latest-claim-settlement-ratios-of-all-indian-life-insurance-companies-in-2025/articleshow/118762508.cms" target="_blank" rel="noreferrer noopener">LIC: 96.42%</a>, HDFC Life: <a href="https://www.hdfclife.com/term-insurance-plans/claim-settlement-ratio" target="_blank" rel="noreferrer noopener">99.68%</a>, etc.).  </li>
</ul>



<ul class="wp-block-list">
<li>Choose riders if necessary. </li>
</ul>



<ul class="wp-block-list">
<li>Utilize online resources to calculate premiums. </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Who_Should_Buy_Life_Insurance_and_When"></span>Who Should Buy Life Insurance and When?&nbsp;<span class="ez-toc-section-end"></span></h2>



<ul class="wp-block-list">
<li>Salaried professionals (to safeguard dependents). </li>
</ul>



<ul class="wp-block-list">
<li>New parents (for the future of the child). </li>
</ul>



<ul class="wp-block-list">
<li>Borrowers of loans (to cover EMIs). </li>
</ul>



<ul class="wp-block-list">
<li>Young professionals are eligible for reduced premiums. </li>
</ul>



<ul class="wp-block-list">
<li>Retirees (if they still have dependents). </li>
</ul>



<p>Your early 20s to 30s is an ideal time to buy because premiums are lower.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Conclusion"></span>Conclusion&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The goal of life insurance is to leave a legacy, not only to protect against danger. Whether you need savings-linked insurance or affordable term insurance, pick a plan that fits your budget. Term plans are ideal for protection. Endowment plans/ ULIPs help with insurance and savings. Policies are more rewarding when there are tax benefits. To lock in cheaper rates, buy early.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs_on_What_is_Life_Insurance"></span>FAQs on What is Life Insurance<span class="ez-toc-section-end"></span></h2>



<div class="schema-faq wp-block-yoast-faq-block"><div class="schema-faq-section" id="faq-question-1753652677190"><strong class="schema-faq-question">What is the basic purpose of life insurance?</strong> <p class="schema-faq-answer">Life insurance ensures your family’s financial stability in case of demise. It replaces lost income, covers debts, and funds future needs like education or retirement. Tax benefits under Sections 80C &amp; 10(10D) make it extra valuable.</p> </div> <div class="schema-faq-section" id="faq-question-1753652688191"><strong class="schema-faq-question">How many types of life insurance are there in India?</strong> <p class="schema-faq-answer">Five main types: term insurance (pure protection), endowment (savings + insurance), ULIPs (investment-linked), whole life (lifetime cover), and money-back (periodic payouts). Choose based on your goals.</p> </div> <div class="schema-faq-section" id="faq-question-1753652702042"><strong class="schema-faq-question">What is the difference between term and whole life insurance?</strong> <p class="schema-faq-answer">Term insurance covers a fixed period (e.g., 20 years) and pays only on death. Whole life covers you until death and includes a savings component. Term plans are cheaper; whole life costs more but builds cash value.</p> </div> <div class="schema-faq-section" id="faq-question-1753652714307"><strong class="schema-faq-question">Can life insurance be used as an investment?</strong> <p class="schema-faq-answer">Yes, policies like ULIPs and endowment plans combine insurance with investments. However, returns are often lower than pure investments (like mutual funds). Term insurance + separate investments may work better.</p> </div> <div class="schema-faq-section" id="faq-question-1753652727106"><strong class="schema-faq-question">How to choose the best life insurance policy for me?</strong> <p class="schema-faq-answer">Consider age, income, dependents, and goals. Young earners benefit from term plans; those wanting savings may prefer endowment/ULIPs. Always check the insurer’s claim settlement ratio.</p> </div> </div>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_is_Life_Insurance" >What is Life Insurance?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#How_Does_Life_Insurance_Work" >How Does Life Insurance Work?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Types_of_Life_Insurance_Policies" >Types of Life Insurance Policies&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Benefits_of_Having_Life_Insurance" >Benefits of Having Life Insurance&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#Key_Features_of_Life_Insurance_Plans" >Key Features of Life Insurance Plans&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-6" href="#Choosing_the_Best_Life_Insurance_Policy_in_India" >Choosing the Best Life Insurance Policy in India&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-7" href="#Who_Should_Buy_Life_Insurance_and_When" >Who Should Buy Life Insurance and When?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#Conclusion" >Conclusion&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#FAQs_on_What_is_Life_Insurance" >FAQs on What is Life Insurance</a></li></ul></nav></div>


What is Life Insurance? A Beginner’s Guide to Plans, Benefits & Policy Types 


<p>If you are curious about &#8220;companies going public&#8221; or wondering &#8220;what is an initial public offering (IPO)?&#8221;, in layman&#8217;s terms, a firm goes public when it first sells its stock to the public via an IPO. Let&#8217;s learn about the process of going public, why a company would make the decision to go public, and its implications, both for the firm and for you as an investor.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Does_It_Mean_When_a_Company_Goes_Public"></span>What Does It Mean When a Company Goes Public?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>When a firm goes public, it transitions from a privately held entity to a publicly listed company. Before the IPO, it was owned by the founders, early employees, and venture capitalists. An IPO allows anyone to acquire shares on the open market, typically on exchanges such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). This process takes approximately six months and requires collaboration among investment banks, accountants, lawyers, and financial consultants.&nbsp;</p>



<p>You’ll notice key changes:&nbsp;</p>



<ul class="wp-block-list">
<li>The company gains access to capital from you. </li>
</ul>



<ul class="wp-block-list">
<li>Original owners may liquidate holdings, creating exit opportunities. </li>
</ul>



<ul class="wp-block-list">
<li>Financials become transparent, and the company answers to regulators and shareholders  </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Is_an_IPO"></span>What Is an IPO?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>An IPO is the process of taking a company public. It involves selling securities to the public through sponsors, often investment banks, who appraise the company&#8217;s value and determine the initial share listing price.&nbsp;</p>



<p>For you as an investor, IPOs provide benefits such as:&nbsp;</p>



<ul class="wp-block-list">
<li>The opportunity to participate in high-profile tales, such as Meta&#8217;s or Google&#8217;s momentous IPOs. </li>
</ul>



<ul class="wp-block-list">
<li>Early ownership in high-growth companies. </li>
</ul>



<ul class="wp-block-list">
<li>There is potential for significant appreciation, particularly if demand increases after the IPO. </li>
</ul>



<p>However, there are also hazards associated with IPOs:&nbsp;</p>



<ul class="wp-block-list">
<li>Large institutional orders may push out smaller investors during allocation. </li>
</ul>



<ul class="wp-block-list">
<li>Pricing inefficiencies may result in overvaluation before listing. </li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Why_Do_Companies_Go_Public"></span>Why Do Companies Go Public?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Companies choose to go public for several compelling reasons:&nbsp;</p>



<ul class="wp-block-list">
<li>Providing an exit strategy or partial liquidity to the original investors and founders. </li>
</ul>



<ul class="wp-block-list">
<li>Public shares can be used for ESOPs and as consideration in mergers or acquisitions. </li>
</ul>



<ul class="wp-block-list">
<li>Raise funds to fund expansion, including growth, acquisitions, and R&amp;D. </li>
</ul>



<ul class="wp-block-list">
<li>Enhance reputation and visibility. A public listing increases credibility. </li>
</ul>



<p>However, it does come with one key drawback that public companies face increased regulatory costs, more frequent disclosure, and market pressure for periodical success.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Step-by-Step_IPO_Process_in_India"></span>Step-by-Step: IPO Process in India&nbsp;<span class="ez-toc-section-end"></span></h2>



<ol start="1" class="wp-block-list">
<li><strong>Decision and Board Approval</strong>: An IPO journey begins with a strategic decision by the company&#8217;s board. They assess the financial health and market timing before approving the idea to go public. This puts everything into motion. </li>
</ol>



<ol start="2" class="wp-block-list">
<li><strong>Appointment of trade bankers and benefactors</strong>: The company will appoint lead managers (trade/merchant bankers) to oversee compliance, pricing, and marketing. Benefactors/underwriters can help mitigate risks by agreeing to buy any unsubscribed shares. </li>
</ol>



<ol start="3" class="wp-block-list">
<li><strong>Due Diligence and DRHP Drafting</strong>: A thorough audit is conducted, examining finances, operations, and legal standing. Then comes the Draft Red Herring Prospectus (DRHP), a thorough document for SEBI&#8217;s introductory review. </li>
</ol>



<ol start="4" class="wp-block-list">
<li><strong>Filing with SEBI and Regulatory Approval</strong>: You submit the DRHP to SEBI. The regulator reviews disclosures, requests clarifications, and eventually approves the IPO to continue via the DRHP. </li>
</ol>



<ol start="5" class="wp-block-list">
<li><strong>Marketing &amp; Roadshows</strong>: Presentations and investor conferences generate buzz, showcase growth prospects, and attract institutional and high-net-worth individuals (HNIs). </li>
</ol>



<ol start="6" class="wp-block-list">
<li><strong>Price Band and Bids</strong>: A price range is set, then starts bidding. You make bids within the range, influencing the ultimate price based on demand. </li>
</ol>



<ol start="7" class="wp-block-list">
<li><strong>Subscription and Allotments</strong>: Investors can apply during the predetermined window (time period – usually 3 to 5 days). Shares are allocated based on demand, often by lottery for retail applicants. Unallotted bids are eligible for refunds. </li>
</ol>



<ol start="8" class="wp-block-list">
<li><strong>Lists and Trades</strong>: Finally, shares are listed on the NSE and BSE. They are credited to your demat accounts, and trading can begin. After listing, the company must adhere to ongoing regulatory and disclosure rules. </li>
</ol>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Risks_and_Rewards_of_Investing_in_IPOs"></span>Risks and Rewards of Investing in IPOs&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>IPOs do come with certain benefits as well as some risks that need to be considered before you put your money in.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Potential_Rewards"></span>Potential Rewards&nbsp;<span class="ez-toc-section-end"></span></h3>



<ul class="wp-block-list">
<li>Access to high-growth companies that are not yet included in standard portfolios. </li>
</ul>



<ul class="wp-block-list">
<li>Early availability might result in huge price appreciation. </li>
</ul>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Key_Risks"></span>Key Risks&nbsp;<span class="ez-toc-section-end"></span></h3>



<ul class="wp-block-list">
<li>If you are a retail investor, you could frequently face allocation issues and might get fewer shares. </li>
</ul>



<ul class="wp-block-list">
<li>Volatility increases are common in early trading days. </li>
</ul>



<ul class="wp-block-list">
<li>Overvaluation and enthusiasm may fade rapidly after listing. </li>
</ul>



<p>The bottom line is that IPO investing could be suitable for you if you can understand the fundamentals and manage risk. It&#8217;s not just hype; it requires research.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Happens_After_a_Company_Goes_Public"></span>What Happens After a Company Goes Public?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>When a company goes public, its shares get listed on the stock exchange, letting you buy and sell them depending on the market demand. This transformation adds a layer of scrutiny and openness because the company now complies with regulatory obligations such as quarterly financial reporting, annual general meetings (AGMs), and the statements required by SEBI and stock exchanges. Lock-in periods can apply to founders and early investors, limiting them from selling shares for a set period. A public listing exposes the company to volatility, since its share price swings in reaction to performance, news, and your emotions. However, being publicly traded can boost a company&#8217;s compliance efforts and acceptability, access to financing, and appeal to talent and strategic partners, if it maintains good governance and consistent performance.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Conclusion"></span>Conclusion&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>An IPO is not just a financial event; it&#8217;s a watershed moment for a company. It gives access to cash, visibility, and new ownership models. For you, it&#8217;s a thrilling but complicated opportunity. If you&#8217;re willing to do your homework, grasp the basics, and embrace risk, an IPO might be a valuable addition to your investing portfolio.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs_About_How_Companies_Go_Public"></span>FAQs About How Companies Go Public<span class="ez-toc-section-end"></span></h2>



<div class="schema-faq wp-block-yoast-faq-block"><div class="schema-faq-section" id="faq-question-1753176499868"><strong class="schema-faq-question">What is the full form of IPO?</strong> <p class="schema-faq-answer">An initial public offering is referred to as an IPO. It is the procedure by which a private company first makes its shares available to the public, enabling retail investors to purchase shares and facilitating the company&#8217;s ability to raise money via the stock market.</p> </div> <div class="schema-faq-section" id="faq-question-1753176510985"><strong class="schema-faq-question">How long does the IPO process take in India?</strong> <p class="schema-faq-answer">Depending on the company&#8217;s readiness and regulatory permissions, the initial public offering (IPO) process in India typically takes three to six months. Board approvals, the submission of the Draft Red Herring Prospectus (DRHP), SEBI review, marketing, subscription, and, in the end, listing the shares on stock exchanges such as the NSE or BSE are all included in this process.</p> </div> <div class="schema-faq-section" id="faq-question-1753176524450"><strong class="schema-faq-question">Is investing in IPOs safe for beginners?</strong> <p class="schema-faq-answer">Although it can be profitable, investing in initial public offerings (IPOs) carries risks, particularly for beginners. Following the listing, prices could fluctuate, and businesses frequently have a short track record of public success. Before taking part in an IPO, do an extensive study or speak with a financial counsellor if you&#8217;re new to investing.</p> </div> <div class="schema-faq-section" id="faq-question-1753176537716"><strong class="schema-faq-question">What are the benefits of a company going public?</strong> <p class="schema-faq-answer">Going public allows a company to raise significant amounts of capital, increase its market credibility, and give liquidity to those who invested early. It also raises brand awareness, simplifies employee stock options, and builds a better foundation for development, acquisitions, and global growth.</p> </div> <div class="schema-faq-section" id="faq-question-1753176550252"><strong class="schema-faq-question">How do I apply for an IPO in India?</strong> <p class="schema-faq-answer">To apply for an initial public offering (IPO), you must have a demat account, and an account with ASBA (Application Supported by Blocked Amount) enabled. During the IPO subscription window, you can apply using your broker&#8217;s platform or your bank&#8217;s net banking system.</p> </div> </div>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_Does_It_Mean_When_a_Company_Goes_Public" >What Does It Mean When a Company Goes Public?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#What_Is_an_IPO" >What Is an IPO?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Why_Do_Companies_Go_Public" >Why Do Companies Go Public?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Step-by-Step_IPO_Process_in_India" >Step-by-Step: IPO Process in India&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#Risks_and_Rewards_of_Investing_in_IPOs" >Risks and Rewards of Investing in IPOs&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-6" href="#Potential_Rewards" >Potential Rewards&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-7" href="#Key_Risks" >Key Risks&nbsp;</a></li></ul></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#What_Happens_After_a_Company_Goes_Public" >What Happens After a Company Goes Public?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#Conclusion" >Conclusion&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-10" href="#FAQs_About_How_Companies_Go_Public" >FAQs About How Companies Go Public</a></li></ul></nav></div>


How Do Companies Go Public and What Does It Mean for Investors 


<p>Planning for your daughter’s future is one of the most meaningful financial goals you can set. The Sukanya Samriddhi Yojana (SSY) is a small savings scheme introduced by the Government of India as part of its “Beti Bachao, Beti Padhao” initiative. This account offers high interest, tax benefits, and long-term security. Here&#8217;s a complete guide to understanding the scheme in 2025.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_is_Sukanya_Samriddhi_Yojana"></span>What is Sukanya Samriddhi Yojana?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme specifically designed for the welfare of the girl child. Launched in 2015, SSY encourages parents or legal guardians to build a secure financial future for their daughters through disciplined, long-term savings.&nbsp;</p>



<p>Beyond being a financial product, SSY also serves a broader social objective—promoting financial inclusion, gender equality, and female education across the country.&nbsp;</p>



<p><strong>Key Highlights:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li><strong>Interest Rate (2025):</strong> 8.2% p.a. (compounded annually)&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Tenure:</strong> 21 years from the date of account opening&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Minimum Deposit:</strong> ₹250 per annum&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Maximum Deposit:</strong> ₹1.5 lakh per annum&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Tax Benefits:</strong> Full exemption on deposit, interest, and maturity amount under Section 80C (EEE category)&nbsp;</li>
</ul>



<p>SSY is one of the most rewarding savings schemes in India for girl children due to its tax efficiency and high guaranteed returns.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Sukanya_Samriddhi_Yojana_Benefits"></span>Sukanya Samriddhi Yojana Benefits&nbsp;<span class="ez-toc-section-end"></span></h2>



<ol class="wp-block-list" start="1">
<li><strong>High Interest Rates</strong>: One of the highest rates among small savings schemes. It’s compounded annually and revised quarterly by the Ministry of Finance.&nbsp;</li>
</ol>



<ul class="wp-block-list">
<li><em>Example</em>: If you invest ₹1,000 per month for 15 years at 8.2% interest, you could accumulate over ₹3.8 lakh by the time the account matures.&nbsp;</li>
</ul>



<ol class="wp-block-list" start="2">
<li><strong>Triple Tax Exemption (EEE)</strong>:&nbsp;</li>
</ol>



<ul class="wp-block-list">
<li><strong>Exempt on Investment</strong>: Contributions are deductible under Section 80C (up to ₹1.5 lakh/year)&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Exempt on Interest</strong>: No tax is levied on the interest earned&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Exempt on Maturity</strong>: Full maturity amount is tax-free&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><em>This makes SSY more tax-efficient than many other 80C options like FDs or ELSS, especially for long-term savings.</em>&nbsp;</li>
</ul>



<ol class="wp-block-list" start="3">
<li><strong>Long-Term Wealth Creation</strong>: Small, consistent savings can create a significant corpus for a daughter’s higher education or marriage expenses.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="4">
<li><strong>Affordable and Accessible</strong>: With a minimum deposit of ₹250, the scheme is inclusive for all income groups.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="5">
<li><strong>Security</strong>: Being a government-backed scheme, it carries zero default risk.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="6">
<li><strong>Flexibility</strong>: Deposits can be made in a lump sum or in multiple installments throughout the financial year (maximum 12).&nbsp;</li>
</ol>



<ol class="wp-block-list" start="7">
<li><strong>Partial Withdrawals</strong>: Up to 50% of the account balance can be withdrawn once the girl turns 18 for higher education purposes.&nbsp;</li>
</ol>



<ul class="wp-block-list">
<li><em>Example</em>: If your account has a balance of ₹4 lakh when the child turns 18, you can withdraw up to ₹2 lakh to cover tuition or hostel fees.&nbsp;</li>
</ul>



<ol class="wp-block-list" start="8">
<li><strong>Nomination and Transfer</strong>: Accounts can be transferred across India if the depositor relocates, and nominees can be declared for added security.&nbsp;</li>
</ol>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Sukanya_Samriddhi_Yojana_Interest_Rate_2025"></span>Sukanya Samriddhi Yojana Interest Rate (2025)&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The interest rate under SSY is set by the Government of India and revised quarterly.&nbsp;</p>



<p><strong>Historical Rates:</strong>&nbsp;</p>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Financial Year</strong>&nbsp;</td><td><strong>Interest Rate (%)</strong>&nbsp;</td></tr><tr><td>Q1 FY 2025-26&nbsp;</td><td>8.2&nbsp;</td></tr><tr><td>Q4 FY 2023-24&nbsp;</td><td>8.0&nbsp;</td></tr><tr><td>FY 2022-23&nbsp;</td><td>7.6&nbsp;</td></tr><tr><td>FY 2019-20&nbsp;</td><td>8.5&nbsp;</td></tr></tbody></table></figure>



<p><strong>Current Comparison (2025):</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>Sukanya Samriddhi Yojana: 8.2%&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>Public Provident Fund (PPF): 7.1%&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>National Savings Certificate (NSC): 7.7%&nbsp;</li>
</ul>



<p><em>Analysis</em>: With an 8.2% interest rate, SSY not only beats inflation but also outperforms other small savings instruments in post-tax returns, thanks to its EEE status.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Eligibility_Criteria_Age_Limit"></span>Eligibility Criteria &amp; Age Limit&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>To ensure the benefits reach the intended demographic, SSY has defined clear eligibility conditions:&nbsp;</p>



<p><strong>Who Can Open:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>Only resident Indian parents or legal guardians can open an account for a girl child.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>A maximum of two accounts per family is allowed. <em>(Exception: In case of twin/triplet daughters, a third account is permitted.)</em>&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><em>Example</em>: If a couple has twin girls and later gives birth to another daughter, they can open accounts for all three.&nbsp;</li>
</ul>



<p><strong>Age Limit:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>The girl child must be below 10 years of<strong> </strong>age at the time of account opening.&nbsp;</li>
</ul>



<p><strong>Deposit Tenure:</strong>&nbsp;</p>



<ul class="wp-block-list">
<li>Contributions can be made for 15 years from the date of account opening.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>The account matures after 21 years or upon the girl’s marriage (after she turns 18).&nbsp;</li>
</ul>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Documents_Required_for_Sukanya_Samriddhi_Yojana"></span>Documents Required for Sukanya Samriddhi Yojana&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>To open an SSY account, the following documents are necessary:&nbsp;</p>



<ol class="wp-block-list" start="1">
<li><strong>Birth Certificate</strong> of the girl child (mandatory)&nbsp;</li>
</ol>



<ol class="wp-block-list" start="2">
<li><strong>Identity Proof</strong> of parent/guardian (Aadhaar Card, PAN Card, Passport, etc.)&nbsp;</li>
</ol>



<ol class="wp-block-list" start="3">
<li><strong>Address Proof</strong> of parent/guardian (utility bill, Aadhaar, voter ID)&nbsp;</li>
</ol>



<ol class="wp-block-list" start="4">
<li><strong>Photograph</strong> of the child and guardian&nbsp;</li>
</ol>



<ol class="wp-block-list" start="5">
<li>Initial deposit of minimum ₹250 via cheque, demand draft, or cash&nbsp;</li>
</ol>



<p>All documents must be self-attested and submitted at the time of account opening.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_to_Open_a_Sukanya_Samriddhi_Yojana_SSY_Account"></span>How to Open a Sukanya Samriddhi Yojana (SSY) Account&nbsp;<span class="ez-toc-section-end"></span></h2>



<p><strong>Offline Process:</strong>&nbsp;</p>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Step</strong>&nbsp;</td><td><strong>Task</strong>&nbsp;</td></tr><tr><td>1&nbsp;</td><td>Visit authorized bank/post office&nbsp;</td></tr><tr><td>2&nbsp;</td><td>Fill SSY account opening form&nbsp;</td></tr><tr><td>3&nbsp;</td><td>Submit KYC documents and birth certificate&nbsp;</td></tr><tr><td>4&nbsp;</td><td>Make an initial deposit (min ₹250)&nbsp;</td></tr><tr><td>5&nbsp;</td><td>Collect passbook for account reference&nbsp;</td></tr></tbody></table></figure>



<p><strong>Online (via IPPB App):</strong>&nbsp;</p>



<ol class="wp-block-list" start="1">
<li>Download the India Post Payments Bank (IPPB) mobile app.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="2">
<li>Register and link your existing bank account.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="3">
<li>Select DOP Products → Sukanya Samriddhi Yojana.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="4">
<li>Enter the SSY account number and customer ID.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="5">
<li>Set up auto-debit for regular contributions.&nbsp;</li>
</ol>



<ol class="wp-block-list" start="6">
<li>Receive notifications for every successful deposit.&nbsp;</li>
</ol>



<p><em>Note</em>: Currently, full online opening is not available across all banks, but digital contributions streamline account maintenance.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Conclusion"></span>Conclusion&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The Sukanya Samriddhi Yojana is more than just a financial product—it’s a step toward ensuring that every girl child in India has the financial support she needs for education and personal growth. With high interest, tax-free returns, and government backing, it stands out as one of the most reliable long-term investment tools for parents.&nbsp;</p>



<p>Early investment, even in small amounts, can result in a significant corpus at maturity. With its flexible contributions, powerful tax savings, and secure structure, SSY is a must-have component in every parent’s financial plan.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Frequently_Asked_Questions_FAQs"></span>Frequently Asked Questions (FAQs)&nbsp;<span class="ez-toc-section-end"></span></h2>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="What_is_the_benefit_of_Sukanya_Samriddhi_Yojana"></span>What is the benefit of Sukanya Samriddhi Yojana?<span class="ez-toc-section-end"></span></h3>



<p>High interest, triple tax exemption, and a secure corpus for your daughter’s future.</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Can_we_withdraw_money_from_Sukanya_Samriddhi_Yojana"></span>Can we withdraw money from Sukanya Samriddhi Yojana?<span class="ez-toc-section-end"></span></h3>



<p>Yes, up to 50% can be withdrawn after the girl turns 18 for higher education. Full withdrawal is allowed after 21 years or on marriage (post 18). </p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="How_can_I_check_my_Sukanya_account_balance"></span>How can I check my Sukanya account balance? <span class="ez-toc-section-end"></span></h3>



<p>Via passbook updates at the post office or linked bank, or through the IPPB mobile app if auto-debit is set up. </p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Which_is_better_PPF_or_Sukanya_Samriddhi_Yojana"></span>Which is better, PPF or Sukanya Samriddhi Yojana?<span class="ez-toc-section-end"></span></h3>



<p>Both have unique benefits. SSY is better for those with girl children under 10, offering higher returns. PPF is more flexible in usage and tenure. </p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Is_Sukanya_Samriddhi_Yojana_tax_free"></span>Is Sukanya Samriddhi Yojana tax free?<span class="ez-toc-section-end"></span></h3>



<p>Yes. It falls under the EEE category: investment, interest, and maturity are all tax-exempt under Section 80C.</p>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<span class="ez-toc-title-toggle"><a href="#" class="ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle" aria-label="Toggle Table of Content"><span class="ez-toc-js-icon-con"><span class=""><span class="eztoc-hide" style="display:none;">Toggle</span><span class="ez-toc-icon-toggle-span"><svg style="fill: #999;color:#999" xmlns="http://www.w3.org/2000/svg" class="list-377408" width="20px" height="20px" viewBox="0 0 24 24" fill="none"><path d="M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z" fill="currentColor"></path></svg><svg style="fill: #999;color:#999" class="arrow-unsorted-368013" xmlns="http://www.w3.org/2000/svg" width="10px" height="10px" viewBox="0 0 24 24" version="1.2" baseProfile="tiny"><path d="M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z"/></svg></span></span></span></a></span></div>
<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_is_Sukanya_Samriddhi_Yojana" >What is Sukanya Samriddhi Yojana?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#Sukanya_Samriddhi_Yojana_Benefits" >Sukanya Samriddhi Yojana Benefits&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Sukanya_Samriddhi_Yojana_Interest_Rate_2025" >Sukanya Samriddhi Yojana Interest Rate (2025)&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Eligibility_Criteria_Age_Limit" >Eligibility Criteria &amp; Age Limit&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#Documents_Required_for_Sukanya_Samriddhi_Yojana" >Documents Required for Sukanya Samriddhi Yojana&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-6" href="#How_to_Open_a_Sukanya_Samriddhi_Yojana_SSY_Account" >How to Open a Sukanya Samriddhi Yojana (SSY) Account&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-7" href="#Conclusion" >Conclusion&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#Frequently_Asked_Questions_FAQs" >Frequently Asked Questions (FAQs)&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-9" href="#What_is_the_benefit_of_Sukanya_Samriddhi_Yojana" >What is the benefit of Sukanya Samriddhi Yojana?</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-10" href="#Can_we_withdraw_money_from_Sukanya_Samriddhi_Yojana" >Can we withdraw money from Sukanya Samriddhi Yojana?</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-11" href="#How_can_I_check_my_Sukanya_account_balance" >How can I check my Sukanya account balance? </a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-12" href="#Which_is_better_PPF_or_Sukanya_Samriddhi_Yojana" >Which is better, PPF or Sukanya Samriddhi Yojana?</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-13" href="#Is_Sukanya_Samriddhi_Yojana_tax_free" >Is Sukanya Samriddhi Yojana tax free?</a></li></ul></li></ul></nav></div>


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Sukanya Samriddhi Yojana: A Complete Guide for 2025 


<p>Inflation is one of the most frequently discussed and often misunderstood concepts in economics. The inflation narrative is always how it is decreasing the value of money, how ₹500 doesn’t stretch as much as it used to five years back, how price rise is eating up your savings, and so forth.&nbsp;&nbsp;&nbsp;</p>



<p>Inflation touches nearly every aspect of our daily lives, from the cost of a morning cup of tea to the broader health of national and global economies. The inflation rate shapes a country&#8217;s monetary policy, keeping media outlets buzzing ahead of the release of inflation numbers.&nbsp; The current inflation rate in India is hovering around 3%. If inflation is truly the villain it is portrayed to be, should the RBI aim for 0% inflation and strive to maintain stable prices? Or, should the RBI work towards maintaining a healthy, yet steady rate of inflation in India?&nbsp;&nbsp;</p>



<p>This article seeks to examine the multifaceted nature of inflation, exploring its causes, types, and implications, particularly in the Indian context, and whether its reputation as an economic threat is always warranted.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Exactly_is_Inflation"></span>What Exactly is Inflation?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Inflation is the rate at which prices for goods and services rise, eroding purchasing power over time. In simpler terms, your ₹500 buys you a little less than it did last year.&nbsp;</p>



<p>Economists believe that inflation is a result of an imbalance between supply and demand in the economy, often caused by an increase in the money supply. The post-pandemic surge in inflation across developed and developing economies in North America, Europe, and Asia was a result of increased money supply in the form of bailout packages and social security aid during the pandemic year, aimed at maintaining consumption.&nbsp;&nbsp;</p>



<p>While inflation is one of the most talked-about economic indicators, it isn’t always catastrophic. Economies are living, breathing systems. As demand grows, prices must adjust. When this rise is steady and predictable, it signals that people are working, spending, and consuming. In such a scenario, inflation is not a monster under the bed—it’s more like the pulse of progress.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="The_Flavors_of_Inflation"></span>The Flavors of Inflation&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Not all inflation is the same. Economists recognize several types of inflation, each driven by different forces.&nbsp;</p>



<p><strong>Demand-pull inflation</strong> arises when more money chases fewer goods. Imagine a festival season with booming demand: sellers know they can raise prices, and buyers still queue up. It’s a sign of a thriving economy—up to a point.&nbsp;</p>



<p><strong>Cost-push inflation</strong>, by contrast, originates from the supply side. If transport becomes costlier due to rising fuel prices or crops fail, sellers increase prices to protect margins. This inflation hurts more because it’s not a reflection of economic prosperity, but rather a sign of scarcity or inefficiency.&nbsp;</p>



<p><strong>Built-in inflation </strong>is an economic echo. Workers demand higher wages to match rising costs. Employers raise prices to cover higher salaries. The loop feeds itself unless broken by external intervention, often from a central bank.&nbsp;</p>



<p>Irrespective of the causes of inflation, the price rise and the reduction in purchasing power of money are always the end results.&nbsp;&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Causes_of_Inflation_in_India"></span>Causes of Inflation in India?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The inflation story is a complex braid of global dependencies and local sensitivities.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Global_vs_Domestic_Triggers"></span>Global vs. Domestic Triggers&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Global triggers impact inflation in India, as we are a net importer of crude oil, pulses, and edible oils. Any geopolitical shock that affects the price of crude oil also impacts inflation rates in India. A war in Europe? Petrol prices spike in Pune. Drought in Brazil? Soya oil costs shoot up in Chennai.&nbsp;</p>



<p>Domestically, inflation is shaped by monsoon patterns, supply chain bottlenecks, government subsidies, and Minimum Support Price (MSP) policies. A poor onion harvest can have more political and economic impact than a stock market crash. India’s inflation is particularly food-sensitive, and food inflation disproportionately affects the financially vulnerable.&nbsp;</p>



<p>While a range of factors can impact inflation, it is the central bank’s job to control inflation. Here are the mechanics of inflation in India and how the Reserve Bank of India (RBI) manages inflation.&nbsp;&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Indias_Inflation_Mechanics"></span>India’s Inflation Mechanics&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>In India, inflation is monitored through two key indices, each offering distinct insights into price movements across consumer and wholesale markets. These measurements not only shape public perception but also inform critical monetary policy decisions by the Reserve Bank of India. Let’s examine how inflation is quantified, what current trends reveal, and the role of policy in maintaining economic stability.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="How_Do_We_Measure_Inflation_in_India"></span>How Do We Measure Inflation in India?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>India used two indices— the Consumer Price Index and the Wholesale Price Index —to quantify inflation. Both the CPI and WPI inflation numbers are announced every month. &nbsp;</p>



<ul class="wp-block-list">
<li><strong>Consumer Price Index (CPI)</strong>: Reflects what urban and rural households pay for daily essentials, from rice and vegetables to clothes and school fees.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li><strong>Wholesale Price Index (WPI)</strong>: Captures price movements at the wholesale level, before the goods hit the shelves.&nbsp;</li>
</ul>



<p>The <strong>Reserve Bank of India </strong>uses the Consumer Price Index as its benchmark, targeting an inflation range of 2% to 6%, with 4% as the ideal midpoint.&nbsp;&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Whats_Happening_Right_Now"></span>What’s Happening Right Now?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>The CPI for April 2025 came in at a highly &nbsp;favorable&nbsp;number of 3.16%, whereas the WPI came in at 0.85%. The CPI number is the lowest since July 2019 and comfortably below the RBI’s 4% target range.&nbsp;</p>



<p>Additionally, the RBI expects inflation to remain around the 3% mark, owing to a &nbsp;favorable&nbsp;summer with no heatwave days in May and an early onset of the monsoon, with an above-average prediction. While domestic factors remain constant, geopolitical risk stemming from the Ukraine-Russia and Israel-Gaza conflicts can spur an increase in crude prices, negatively impacting inflation.&nbsp;&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="RBIs_Role_in_Controlling_the_Inflation_Rate_in_India"></span>RBIs Role in Controlling the Inflation Rate in India&nbsp;&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Milton Friedman famously said inflation is caused by too much money chasing too few goods, pointing to the supply of money in the economy.&nbsp;&nbsp;</p>



<p>The RBI controls the circulation of money in India, and hence, a loose monetary policy results in an excessive money supply. In contrast, a conservative economic policy can starve the supply of money. It is the RBI’s job to maintain the optimal supply of money that is just a little above the demand for money in the economy. &nbsp;</p>



<p>The RBI, to maintain steady inflation, uses <a href="https://m.rbi.org.in/scripts/FS_Overview.aspx?fn=2752" target="_blank" rel="noreferrer noopener">monetary policy instruments</a> such as the repo rate, reverse repo rate, standing deposit policy, and cash reserve ratio to manipulate the supply of money in the economy. &nbsp;</p>



<p>Higher repo rates discourage borrowing and spending, cooling demand. Lower rates do the opposite. It’s a dance of balance: too aggressive, and the economy slows; too soft, and inflation runs amok.&nbsp;</p>



<p>As discussed above, the inflation rate is coming down. Should the RBI use the monetary policy tools to bring down the inflation rate to zero, putting the price debate to rest? We need to understand the concepts of inflation, deflation, and disinflation to determine if zero or negative inflation can help India.&nbsp;&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Inflation_vs_Deflation_vs_Disinflation"></span>Inflation vs. Deflation vs. Disinflation&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Inflation is defined as the general price rise in the economy. While inflation is an economic indicator when it comes to demand- and supply-related price changes in the economy, it is not the only one. Inflation cannot be understood in silos because the absence of inflation and cooling inflation are two distinct phenomena, which, although related to inflation, paint a very different picture about the economy&#8217;s status. Understanding the concepts of deflation and disinflation will help you comprehend the various facets of inflation. &nbsp;</p>



<ul class="wp-block-list">
<li><strong>Deflation&nbsp;</strong></li>
</ul>



<p>Deflation is the exact opposite of inflation, defined by a sustained fall in prices. This might sound great, but it’s often seen as the most significant economic red flag. Deflation in an economy occurs when consumers postpone purchases, expecting prices to drop further. Businesses lose revenue, and the economy enters a vicious cycle, ultimately pushing it into recession.&nbsp;</p>



<ul class="wp-block-list">
<li><strong>Disinflation</strong>&nbsp;&nbsp;</li>
</ul>



<p>Disinflation is the absence of inflation, defined by a cooling of inflation, often as a result of policy moves. This is generally followed by a period of high inflation, where the central bank steps in to counter the spiraling price rise.&nbsp;</p>



<p>In this spectrum, mild inflation is the &#8220;just right&#8221; zone economists aim for: enough to encourage spending and investment, not so much that it causes panic.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Deflation_and_Japan"></span>Deflation and Japan&nbsp;&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Deflation sets in when prices start to fall in an economy. The immediate impact could be positive on consumers, but the long-term consequences can be deeply damaging. Japan offers a textbook example of how deflation can grip an economy and resist even aggressive policy interventions.&nbsp;</p>



<p>Beginning in the 1990s, Japan entered a prolonged period of economic stagnation and deflation, often referred to as the “Lost Decades.” With consumer prices falling or remaining flat, people delayed spending in anticipation of even lower prices, while businesses scaled back investment and hiring. This behavior created a vicious cycle of weak demand, reduced earnings, and further economic slowdown.&nbsp;</p>



<p>In response, the Bank of Japan (BOJ) adopted unprecedented monetary measures. Its primary mandate was to achieve sustainable price stability, leading it to implement a super-accommodative policy: negative short-term interest rates, caps on long-term yields, and large-scale fiscal stimulus programs. Most notably, in 2016, the BOJ introduced negative interest rates, charging commercial banks 0.1% on excess reserves to encourage lending and fuel spending.&nbsp;</p>



<p>Despite these interventions, Japan spent nearly three decades struggling to lift prices. Even as inflation rose to 4.2% in early 2023, the highest level in 40 years, and wages experienced their most significant increases in decades, the Japanese government has remained cautious.&nbsp;</p>



<p>Japanese officials argue that reversing deflation isn’t just about rising prices—it requires a psychological shift. Households and businesses must believe that inflation, not deflation, is the norm.&nbsp;</p>



<p>Japan’s case underscores how deflation is not merely an economic condition but a deep-rooted mindset. And once it takes hold, even bold monetary experiments may take decades to unwind their grip.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="A_Healthy_Dose_of_Inflation_is_Good"></span>A Healthy Dose of Inflation is Good&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Zero inflation may sound like an economic paradise, but it’s more like a desert. Prices freezing in place also means wages stagnate, business revenues flatten, and consumer activity slows. It becomes harder for central banks to respond to recessions when there’s no inflation buffer.&nbsp;</p>



<p>Moderate price increases can fuel economic growth. If consumers spend less and save excessively, overall demand falls, slowing production, increasing unemployment, and stalling the economy, a dynamic known as the “paradox of thrift”, as coined by British economist John Maynard Keynes. &nbsp;</p>



<p>In contrast, controlled inflation encourages spending, prompts businesses to invest, raises wages, and fosters job creation. As income and demand rise in tandem, this positive cycle boosts productivity and sustains growth, highlighting that a certain level of inflation can be both natural and necessary.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="So_is_Inflation_Always_Bad"></span>So, is Inflation Always Bad?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>No. In fact, the answer to this is layered, like the economy itself.&nbsp;</p>



<p>Inflation is not a sign of doom. It’s a signal. It tells us the economy is breathing, growing, and adapting. Yes, runaway inflation can destroy savings and widen inequality. However, zero inflation can also hinder progress just as effectively.&nbsp;</p>



<p>The goal isn’t to eliminate inflation, but to manage it. Like the air conditioner your h home, it needs temperature adjustment, not eradication.&nbsp;</p>



<p>So, the next time your cup of filter coffee costs ₹5 more, don’t just wince. Consider it a ripple in the current of economic life—and maybe, just maybe, a sign that the wheels of progress are still turning.</p>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_Exactly_is_Inflation" >What Exactly is Inflation?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#The_Flavors_of_Inflation" >The Flavors of Inflation&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Causes_of_Inflation_in_India" >Causes of Inflation in India?&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-4" href="#Global_vs_Domestic_Triggers" >Global vs. Domestic Triggers&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-5" href="#Indias_Inflation_Mechanics" >India’s Inflation Mechanics&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-6" href="#How_Do_We_Measure_Inflation_in_India" >How Do We Measure Inflation in India?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-7" href="#Whats_Happening_Right_Now" >What’s Happening Right Now?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-8" href="#RBIs_Role_in_Controlling_the_Inflation_Rate_in_India" >RBIs Role in Controlling the Inflation Rate in India&nbsp;&nbsp;</a></li></ul></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#Inflation_vs_Deflation_vs_Disinflation" >Inflation vs. Deflation vs. Disinflation&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-10" href="#Deflation_and_Japan" >Deflation and Japan&nbsp;&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-11" href="#A_Healthy_Dose_of_Inflation_is_Good" >A Healthy Dose of Inflation is Good&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-12" href="#So_is_Inflation_Always_Bad" >So, is Inflation Always Bad?&nbsp;</a></li></ul></nav></div>


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What Is Inflation? Is It Always the Antihero? 


<p>We live in the age of instant everything. Instant noodles, instant coffee, instant swipes.&nbsp; So, when someone tells you that the best way to grow your money is to wait for years, your first instinct might be to laugh, roll your eyes, or both.&nbsp;</p>



<p>But here’s the thing when it comes to building real wealth—the kind that lets you retire early, travel freely, or simply sleep better at night—long-term investing is your best friend.&nbsp;</p>



<p>It’s not flashy or fast, but it works consistently and reliably, and in a world full of financial noise and risky “opportunities,” that kind of boring brilliance is a rare gem.&nbsp;</p>



<p>So, let’s unpack why patience isn’t just a virtue in life, but also in investing.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_Is_Long-term_Investing"></span>What Is Long-term Investing?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>At its core, long-term investing is about putting your money into assets like stocks, mutual funds, ETFs, bonds, or even real estate, and leaving it there, not for a week or a quarter, but for years or even decades.&nbsp;</p>



<p>Think of it as the financial equivalent of planting a mango tree. You water it, care for it, and wait for it to grow patiently. One day, it gives you shade and fruit. But if you keep digging it up every month to check the roots, well, good luck with that fruit.&nbsp;</p>



<p>Long-term usually means five years or more. But depending on your goals—funding your child’s education, buying a house, or retirement—it could stretch over 10, 20, or even 40 years.&nbsp;</p>



<p>And no, you don’t need to be an expert stock picker or sit glued to CNBC. You just need to understand the basics, trust the process, and give your money room to grow.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_Long-term_Investing_Works"></span>How Long-term Investing Works&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Let’s say you invest ₹1,00,000 in a mutual fund that gives you an average annual return of 10%. That doesn’t mean you earn exactly 10% every year—some years it might be 7%, others 15%, maybe even -5%. But over a long-time frame, it averages out.&nbsp;</p>



<p>Now, after 1 year, your investment is worth ₹1,10,000. The next year, you earn 10% on ₹1,10,000—not just on your original ₹1,00,000. That’s called compounding—interest earning interest. (Kind of like making money while you sleep, literally.)&nbsp;</p>



<p>For example, if you start investing with ₹1,00,000:&nbsp;</p>



<p>In 5 years: ₹1,61,000&nbsp;</p>



<p>In 10 years: ₹2,59,000&nbsp;</p>



<p>In 20 years: ₹6,72,000&nbsp;</p>



<p>In 30 years: ₹17,44,000&nbsp;</p>



<p>In 40 years: ₹45,25,000&nbsp;</p>



<p>From just one lakh.&nbsp;</p>



<p>That’s the magic of time and patience. And the earlier you start, the better (because time is the one thing even money can&#8217;t buy more of).&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Key_Benefits_of_Long-term_Investments"></span>Key Benefits of Long-term Investments&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Now that you know how it works, here’s why it works so beautifully:&nbsp;</p>



<p><strong>1. Compounding</strong>&nbsp;</p>



<p>Albert Einstein called compounding the eighth wonder of the world, because it creates money exponentially, and can create a substantial corpus from small amounts.&nbsp;&nbsp;</p>



<p>You don’t just earn on your investment. You earn on your earnings. And the longer you let it run, the bigger the snowball of your corpus. Worthy of its name, isn’t it?&nbsp;</p>



<p><strong>2. Lesser Risk</strong>&nbsp;</p>



<p>Yes, markets are volatile. Yes, your investments will go up and down. But here’s what most people miss: the longer you stay invested, the lower your chances of losing money.&nbsp;</p>



<p>If you have held a diversified portfolio of equities for one year, you could’ve seen returns ranging from -30% to +50%. But over 10–15 years, the range tightens. There has not been a single 15-year period, where equities have failed to deliver positive returns. If you are a more conservative investor, having a significant weightage of your portfolio in bonds could be the way to go for you.&nbsp;</p>



<p><strong>3. Lower Taxes and Fewer Fees</strong>&nbsp;</p>



<p>In India, long-term capital gains (LTCG) on equity investments are taxed at just 12.5% (beyond ₹1.25 lakh per year), compared to short-term capital gains at 20%. Debt investments held over 3 years also benefit from indexation.&nbsp;</p>



<p>Plus, if you’re not constantly buying and selling, you pay less in brokerage and transaction fees.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="4_Long-term_Investment_Strategies_That_Work"></span>4 Long-term Investment Strategies That Work&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Here are four solid strategies that work like a charm (even if you’ve never taken a finance class in your life).&nbsp;</p>



<p><strong>Diversify for Long-term Stability</strong>&nbsp;</p>



<p>Stocks are great for long-term growth. Bonds provide stability. Gold is a good hedge. Real estate offers tangible value. International funds offer currency diversification.&nbsp;</p>



<p>Mix them based on your age, goals, and risk appetite. That way, when one asset class is going through a rollercoaster phase, other investments help keep your portfolio afloat.&nbsp;</p>



<p><strong>Practice Dollar-cost Averaging&nbsp;</strong>&nbsp;</p>



<p>You’ve probably heard the phrase, “Buy low, sell high”. But let’s be honest—who actually knows when the market is low?&nbsp;</p>



<p>That’s why dollar-cost averaging (DCA) is such a lifesaver. You invest a fixed amount (say ₹5,000 or ₹10,000) every month, regardless of market conditions. Some months you’ll buy high, some months low—but over time, your cost averages out (SIP in mutual funds is DCA in disguise).&nbsp;</p>



<p><strong>Periodically Rebalance your Portfolio</strong>&nbsp;</p>



<p>Let’s say you start with a 70:30 equity-debt ratio. A few years later, equities soar and now make up 85% of your portfolio. That’s riskier than you originally planned.&nbsp;</p>



<p>Rebalancing means bringing your allocation back to target by selling a bit of what’s gone up and buying what’s lagging.&nbsp;</p>



<p>Pro tip: Set a calendar reminder to do this once a year, like an annual financial checkup.&nbsp;</p>



<p><strong>Warren Buffett’s Long-term Playbook</strong>&nbsp;</p>



<p>If long-term investing had a mascot, it would be none other than Warren Buffett (with a Coke in one hand). He reached the $1 billion net worth mark when he was 55 years old, which might lead you to think what’s so special about it. But almost 40 years later, he has amassed a net worth of more than $168 billion (as of May 2025). An exponential rise of 170x!&nbsp;&nbsp;</p>



<p>These are his tips for retail investors starting their investment journey:&nbsp;&nbsp;&nbsp;</p>



<ul class="wp-block-list">
<li>Buy quality companies with strong fundamentals&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>Hold them for long durations (of course, after doing your due diligence to ensure your investments are on the right track)&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>Avoid making irrational decisions based on market noise&nbsp;</li>
</ul>



<p>Follow his mantra: “Our favorite holding period is forever”. Although this might be an exaggeration, and Mr. Buffett also rebalances his portfolio from time to time, it is undeniable that he is living proof of what smart long-term investing can do.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="How_to_Start_Your_Long-term_Investment_Journey"></span>How to Start Your Long-term Investment Journey?&nbsp;<span class="ez-toc-section-end"></span></h2>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Set_Clear_Financial_Goals"></span>Set Clear Financial Goals&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>First, figure out why you’re investing.&nbsp;</p>



<p>Is it for retirement at 60? Your dream home at 40? Or for kid’s college at 18? Knowing your timeline helps you pick the right assets — equities for long-term growth, debt for stability, gold for emergencies, and so on.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Know_Your_Risk_Tolerance"></span>Know Your Risk Tolerance&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Be honest with yourself—how do you react to loss?&nbsp;</p>



<p>If you can handle market swings without losing sleep, you can go heavier on equities. If you tend to panic at a 10% dip, build in more debt instruments or conservative funds. Risk tolerance isn’t about bravery. It’s about self-awareness.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Start_Early_Stay_Consistent"></span>Start Early &amp; Stay Consistent&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>You don’t need a fat paycheck. Start with ₹1,000 or ₹2,000 a month, automate it in the form of SIPs and keep on increasing it as your income grows.&nbsp;</p>



<p>Don’t wait for the “perfect time”, because spoiler alert, there isn’t one. The market will always feel uncertain. That’s why consistency beats timing.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Monitor_Without_Overreacting"></span>Monitor Without Overreacting&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Review your portfolio twice a year, or if you love number crunching and want to stay on top of investments, you could do it once every quarter. Rebalance if needed, check if your goals or risk appetite have changed, otherwise, leave it alone.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Final_Thoughts_Patience_Is_a_Great_Investment_Ally"></span>Final Thoughts: Patience Is a Great Investment Ally&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Here’s the truth no one tells you upfront, wealth-building isn’t as exciting as some people drum it up to be.&nbsp;</p>



<p>When you invest for the long haul, you&#8217;re not trying to win a race. You&#8217;re building a bridge, one that takes you from where you are now to the life you truly desire. Whether that&#8217;s early retirement, a beach house, or sending your kids abroad, long-term investing can get you there.&nbsp;</p>



<p>But here’s the catch: it only works if you stay the course. You’ll see dips. You’ll hear scary news. But if you manage to build a solid, diversified portfolio and you stay consistent—even when it’s boring—you’ll come out ahead. Time and again, it’s the patient investors who win at the end.&nbsp;</p>



<p>So instead of chasing the next hot stock or trying to time the market like a, do this:&nbsp;</p>



<ul class="wp-block-list">
<li>Set your goals&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>Pick your strategy&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>Invest consistently&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>And lastly, give it time&nbsp;</li>
</ul>



<p>So go on, plant those seeds, be patient, water them regularly, trim some unwanted weeds, and one day, you’ll look back and realize that quiet, steady patience was the smartest financial move you ever made.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs"></span>FAQs&nbsp;<span class="ez-toc-section-end"></span></h2>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Is_5_Years_Considered_Long-Term"></span>Is 5 Years Considered Long-Term?&nbsp;&nbsp;&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Yes, in most cases, 5 years is considered the starting point of long-term investing. However, the longer you stay invested—10, 20, or even 30 years—the greater the benefits from compounding and reduced risk.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="How_Much_Should_I_Invest_Long-term"></span>How Much Should I Invest Long-term?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>There’s no fixed amount, it depends on your income, goals, and expenses. A good rule of thumb is to invest at least 20% of your monthly income. Start small if needed and increase it as your income grows. Consistency matters more than the amount.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Whats_the_Best_Way_to_Invest_for_the_Long_Run"></span>What’s the Best Way to Invest for the Long Run?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>The best way is to invest consistently in a diversified portfolio—like mutual funds, index funds, or ETFs—based on your risk tolerance and goals. Use SIPs, stay invested through market ups and downs, and review your portfolio yearly.</p>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_Is_Long-term_Investing" >What Is Long-term Investing?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#How_Long-term_Investing_Works" >How Long-term Investing Works&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#Key_Benefits_of_Long-term_Investments" >Key Benefits of Long-term Investments&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#4_Long-term_Investment_Strategies_That_Work" >4 Long-term Investment Strategies That Work&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#How_to_Start_Your_Long-term_Investment_Journey" >How to Start Your Long-term Investment Journey?&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-6" href="#Set_Clear_Financial_Goals" >Set Clear Financial Goals&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-7" href="#Know_Your_Risk_Tolerance" >Know Your Risk Tolerance&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-8" href="#Start_Early_Stay_Consistent" >Start Early &amp; Stay Consistent&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-9" href="#Monitor_Without_Overreacting" >Monitor Without Overreacting&nbsp;</a></li></ul></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-10" href="#Final_Thoughts_Patience_Is_a_Great_Investment_Ally" >Final Thoughts: Patience Is a Great Investment Ally&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-11" href="#FAQs" >FAQs&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-12" href="#Is_5_Years_Considered_Long-Term" >Is 5 Years Considered Long-Term?&nbsp;&nbsp;&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-13" href="#How_Much_Should_I_Invest_Long-term" >How Much Should I Invest Long-term?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-14" href="#Whats_the_Best_Way_to_Invest_for_the_Long_Run" >What’s the Best Way to Invest for the Long Run?&nbsp;</a></li></ul></li></ul></nav></div>


Blog Banner for Why Long-Term Investing Works: Benefits & Strategies

Why Patience Pays Off: The Unique Advantages of Long-term Investments 


<p>When it comes to building a secure retirement corpus, you&#8217;re spoilt for choice. Among the most popular government-backed options available in India are the Public Provident Fund (PPF), Employees’ Provident Fund (EPF), and National Pension System (NPS). Each of these schemes offers tax-saving benefits under Section 80C, but they serve different purposes, follow distinct rules, and suit different kinds of investors.&nbsp;</p>



<p>Understanding how these schemes work, how they compare in terms of returns, flexibility, tax treatment, and withdrawal options can help you make smarter, long-term financial decisions. This blog breaks down everything you need to know about PPF, EPF and NPS in a clear and structured way so you can decide which one or which combination of schemes works best for your financial goals and risk appetite.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_is_Public_Provident_Fund"></span>What is Public Provident Fund?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The government launched the Public Provident Fund in 1968 to encourage individuals to build long-term savings. You can open a PPF account at a bank or post office and contribute up to ₹1.5 lakh per year. The scheme offers a fixed, government-set interest rate, which is revised quarterly. It has a 15-year lock-in period, and the maturity amount, including interest, is fully tax-free.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_is_the_Employees_Provident_Fund"></span>What is the Employees Provident Fund?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The Employees’ Provident Fund (EPF) is a mandatory retirement savings scheme for salaried employees working in organisations registered under the EPF Act. Every month, your employer deducts 12% of your basic salary and dearness allowance toward EPF and matches that contribution (with a portion directed to the Employee Pension Scheme). The Employees’ Provident Fund Organisation (EPFO) manages these funds and declares an annual interest rate. Withdrawals are allowed under specific conditions and become tax-free after 5 years of continuous service.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="What_is_the_National_Pension_System"></span>What is the National Pension System?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>The government introduced the National Pension System as a voluntary, market-linked retirement investment scheme. You can open an NPS account through a Point of Presence (POP) or online. Contributions go into a mix of equity, corporate bonds, and government securities, based on the asset allocation you choose. You can invest until the age of 60, with partial withdrawal options available. At retirement, you must use at least 40% of the corpus to buy an annuity, and the rest can be withdrawn as a lump sum.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Returns_Comparison_PPF_vs_EPF_vs_NPS"></span>Returns Comparison: PPF vs EPF vs NPS&nbsp;<span class="ez-toc-section-end"></span></h2>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Scheme</strong>&nbsp;</td><td><strong>Nature of Returns</strong>&nbsp;</td><td><strong>Current Rate (FY26)</strong>&nbsp;</td><td><strong>Risk Level</strong>&nbsp;</td></tr><tr><td><strong>Public Provident Fund</strong>&nbsp;</td><td>Fixed, government-backed&nbsp;</td><td>7.1% (tax-free)&nbsp;</td><td>Very low&nbsp;</td></tr><tr><td><strong>Employees’ Provident Fund&nbsp;</strong>&nbsp;</td><td>Fixed, declared by EPFO&nbsp;</td><td>8.15% (tax-free)&nbsp;</td><td>Very low&nbsp;</td></tr><tr><td><strong>National Pension System&nbsp;</strong>&nbsp;</td><td>Market-linked&nbsp;</td><td>8% to 10%+ (partially taxable)&nbsp;</td><td>Moderate&nbsp;</td></tr></tbody></table></figure>



<p>Now, here’s where things get interesting:&nbsp;</p>



<ul class="wp-block-list">
<li>PPF offers guaranteed but lower returns. It&#8217;s safe, but growth is capped.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>EPF offers a relatively higher return than PPF and is also tax-free. The catch is that it is only for salaried folks.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>NPS has the highest potential returns, due to its market-linked component. That means your gains can vary depending on stock market’s performance.&nbsp;</li>
</ul>



<p>If you’re young and have the risk appetite for some volatility, NPS can grow your money the fastest. But if you prefer stability and peace of mind, EPF and PPF can be your top alternatives because they are almost risk-free investments as they are backed by the central government!&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Liquidity_Lock-in_Period_Comparison_PPF_vs_EPF_vs_NPS"></span>Liquidity &amp; Lock-in Period Comparison: PPF vs EPF vs NPS&nbsp;<span class="ez-toc-section-end"></span></h2>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Scheme</strong>&nbsp;</td><td><strong>Lock-In Period</strong>&nbsp;</td><td><strong>Partial Withdrawal</strong>&nbsp;</td><td><strong>Loan Facility</strong>&nbsp;</td></tr><tr><td><strong>Public Provident Fund (PPF)</strong>&nbsp;</td><td>15 years&nbsp;</td><td>After 7 years&nbsp;</td><td>Yes (from 3rd to 6th year)&nbsp;</td></tr><tr><td><strong>Employees’ Provident Fund (EPF)</strong>&nbsp;</td><td>Till retirement (or 2 months unemployed)&nbsp;</td><td>Yes, for specific reasons&nbsp;</td><td>No&nbsp;</td></tr><tr><td><strong>National Pension System (NPS)</strong>&nbsp;</td><td>Till 60 years of age&nbsp;</td><td>Partial (up to 25% after 3 years)&nbsp;</td><td>No&nbsp;</td></tr></tbody></table></figure>



<p>Here&#8217;s the breakdown.&nbsp;</p>



<ul class="wp-block-list">
<li>PPF is a long-term commitment. Still, if you find yourself in the need for funds for some emergencies, you can partially withdraw from your balance after seven years or take a loan earlier of up to 25% of the balance in your PPF account from the 3<sup>rd</sup> to 6<sup>th</sup> year.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>EPF is linked to your job. If you decide to quit your job and stay unemployed for 2 months, you can fully withdraw the money from your EPF account.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>NPS is locked in for good. You can only withdraw up to 25% of your contribution before the age of 60, and the rest is locked in till then.&nbsp;</li>
</ul>



<p>So, if you value liquidity, EPF gives you more breathing room, especially if you’re employed. NPS, not so much.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Taxation_Deductions_Under_80C_80CCD"></span>Taxation &amp; Deductions Under 80C &amp; 80CCD&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Taxes. The part we all love to hate. But hey, here’s where things get interesting—because each of these schemes gives you tax benefits, but in slightly different ways.&nbsp;</p>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Scheme</strong>&nbsp;</td><td><strong>Eligible for 80C Deduction</strong>&nbsp;</td><td><strong>Additional Deductions</strong>&nbsp;</td><td><strong>Tax on Maturity</strong>&nbsp;</td></tr><tr><td><strong>Public Provident Fund (PPF)</strong>&nbsp;</td><td>Yes, up to ₹1.5 lakh&nbsp;</td><td>No&nbsp;</td><td>Fully Tax-Free&nbsp;</td></tr><tr><td><strong>Employees’ Provident Fund (EPF)</strong>&nbsp;</td><td>Yes, up to ₹1.5 lakh&nbsp;</td><td>No&nbsp;</td><td>Fully Tax-Free&nbsp;</td></tr><tr><td><strong>National Pension System (NPS)</strong>&nbsp;</td><td>Over &amp; above ₹1.5 lakh&nbsp;</td><td>Extra ₹50,000 under 80CCD(1B)&nbsp;</td><td>Partially Taxable&nbsp;</td></tr></tbody></table></figure>



<p>Let’s decode this.&nbsp;</p>



<ul class="wp-block-list">
<li>PPF and EPF fall under the classic Exempt-Exempt-Exempt (EEE) status. That means no tax on investment, no tax on interest, and no tax on maturity.&nbsp;</li>
</ul>



<ul class="wp-block-list">
<li>The National Pension System (NPS) works on more of an Exempt-Exempt-Taxed (EET) model. Although you can claim deductions of up to ₹1.5 lakh under Section 80C, for all 3 schemes but with NPS you can claim another ₹50,000 under Section 80CCD(1B). At maturity, up to 60% of your corpus is tax-free, the remaining 40%, must be used to buy an annuity, which would be taxed as per your income tax slab.&nbsp;</li>
</ul>



<p>So, if your priorities are maximum tax savings and tax-free returns, PPF and EPF win. But if you want extra deductions beyond ₹1.5 lakh in 80C, NPS could be your savior.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Comparison_Table_All_3_at_a_Glance"></span>Comparison Table: All 3 at a Glance&nbsp;<span class="ez-toc-section-end"></span></h2>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Feature</strong>&nbsp;</td><td><strong>Public Provident Fund (PPF)</strong>&nbsp;</td><td><strong>Employees’ Provident Fund (EPF)</strong>&nbsp;</td><td><strong>National Pension System (NPS)</strong>&nbsp;</td></tr><tr><td><strong>Eligible Investors</strong>&nbsp;</td><td>All resident individuals&nbsp;</td><td>Salaried employees in organizations covered under the EPF Act&nbsp;</td><td>All individuals (salaried and self-employed) aged 18–70&nbsp;</td></tr><tr><td><strong>Contribution Limit</strong>&nbsp;</td><td>₹500 – ₹1.5 lakh per year&nbsp;</td><td>12% of basic salary (mandatory), matched by employer&nbsp;</td><td>Minimum ₹1,000/year; no maximum limit&nbsp;</td></tr><tr><td><strong>Investment Horizon</strong>&nbsp;</td><td>Minimum 15 years (extendable in 5-year blocks); ideal for long-term wealth accumulation&nbsp;</td><td>Throughout employment; automatically deducted each month&nbsp;</td><td>Until 60 years of age; designed as a long-term retirement vehicle&nbsp;</td></tr><tr><td><strong>Lock-in Period</strong>&nbsp;</td><td>15 years&nbsp;</td><td>Till retirement or job change (can be transferred to new employer)&nbsp;</td><td>Locked till 60 years, with partial withdrawal after 3 years&nbsp;</td></tr><tr><td><strong>Returns</strong>&nbsp;</td><td>~7.1% (fixed and revised quarterly by the government)&nbsp;</td><td>~8.15% (interest rate set by EPFO, generally higher than PPF)&nbsp;</td><td>~8–10%+ (market-linked, based on equity-debt mix and fund performance)&nbsp;</td></tr><tr><td><strong>Risk</strong>&nbsp;</td><td>Very low (sovereign-backed, capital protected)&nbsp;</td><td>Very low (government-regulated, fixed interest)&nbsp;</td><td>Moderate (exposure to equity and market fluctuations)&nbsp;</td></tr><tr><td><strong>Tax on Returns</strong>&nbsp;</td><td>Entirely tax-free under EEE (Exempt-Exempt-Exempt) regime&nbsp;</td><td>Entirely tax-free under EEE (Exempt-Exempt-Exempt) regime&nbsp;</td><td>Partially taxable (60% of the corpus is tax-free at maturity, remaining 40% must be annuitized and is taxed as per income slab)&nbsp;</td></tr><tr><td><strong>80C Deduction</strong>&nbsp;</td><td>Yes, up to ₹1.5 lakh&nbsp;</td><td>Yes, up to ₹1.5 lakh&nbsp;</td><td>Yes, ₹50,000 under Section 80CCD(1B) which is over &amp; above the ₹1.5 lakh under 80C&nbsp;</td></tr><tr><td><strong>Liquidity</strong>&nbsp;</td><td>Partial withdrawals allowed after 7 years for specific purposes&nbsp;</td><td>Partial withdrawals for specific life events (e.g., marriage, illness, education) after 5 years of contribution&nbsp;</td><td>Partial withdrawal (up to 25%) allowed after 3 years for specified reasons&nbsp;</td></tr><tr><td><strong>Loan Facility</strong>&nbsp;</td><td>Yes (loan available between 3rd and 6th year)&nbsp;</td><td>No&nbsp;</td><td>No&nbsp;</td></tr><tr><td><strong>Risk Appetite</strong>&nbsp;</td><td>Suitable for low-risk investors seeking guaranteed, predictable returns&nbsp;</td><td>Ideal for low-risk investors looking for stable growth through structured saving&nbsp;</td><td>Suited for moderate to high-risk investors comfortable with market fluctuations and seeking higher long-term returns&nbsp;</td></tr><tr><td><strong>Best For</strong>&nbsp;</td><td>Long-term conservative goals like children’s education, marriage, or retirement where capital protection is key&nbsp;</td><td>Building a disciplined, employer-assisted retirement corpus over a long career&nbsp;</td><td>Creating a diversified retirement corpus combining equity and debt exposure; ideal for tax optimization beyond traditional 80C investments&nbsp;</td></tr></tbody></table></figure>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="Should_You_Choose_One_or_a_Mix"></span>Should You Choose One or a Mix?&nbsp;<span class="ez-toc-section-end"></span></h2>



<p>Each one of these investment options—PPF, EPF and NPS—comes with its own set of rules, benefits, and boundaries. But the real value of these instruments isn’t just in how much tax they help you save or how much interest they offer.&nbsp;</p>



<p>It’s in the way they reflect how you want to approach your future and how they can fit in your portfolio.&nbsp;</p>



<p>Maybe you prefer predictability and slow, steady growth. Maybe you&#8217;re open to a bit of market exposure for higher potential returns. Or maybe you’re somewhere in between—balancing structure with flexibility. None of these choices is wrong. What matters is that they mirror your priorities, your lifestyle, and your timeline.&nbsp;</p>



<p>Tax-saving is just the entry point. What you’re really doing is choosing a framework to shape your financial future—one that aligns with your pace, your plans, and your peace of mind.&nbsp;</p>



<p>Start today, not just to save tax, but to build a future that feels truly yours.&nbsp;<br>Because the best time to plan your tomorrow is while you’re in control of today.&nbsp;</p>



<h2 class="wp-block-heading"><span class="ez-toc-section" id="FAQs"></span>FAQs&nbsp;<span class="ez-toc-section-end"></span></h2>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Can_I_invest_in_all_three_schemes"></span>Can I invest in all three schemes?&nbsp;&nbsp;&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Yes, you can invest in all three—Public Provident Fund (PPF), Employees’ Provident Fund (EPF), and National Pension System (NPS)—simultaneously. They serve different purposes and offer unique tax benefits, so combining them can actually strengthen your retirement portfolio.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Is_NPS_better_than_EPF_for_retirement"></span>Is NPS better than EPF for retirement?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>National Pension System (NPS) can offer higher returns than Employees’ Provident Fund (EPF) due to market exposure, but it also carries more risk. EPF is safer with fixed, tax-free returns. If you’re comfortable with some risk and want better growth, NPS may be better, if you’re a risk averse investor, EPF offers you stability.&nbsp;</p>



<h3 class="wp-block-heading"><span class="ez-toc-section" id="Is_PPF_enough_for_retirement_saving"></span>Is PPF enough for retirement saving?&nbsp;<span class="ez-toc-section-end"></span></h3>



<p>Public Provident Fund (PPF) is a safe and tax-free option, but it alone may not be enough for retirement because of its limited contribution cap and moderate returns. It&#8217;s best to combine PPF with other investments like the National Pension System (NPS) or mutual funds for a stronger retirement corpus.&nbsp;</p>



<figure class="wp-block-pullquote"><blockquote><p>Discover fixed income investments with&nbsp;<strong>Jiraaf</strong>, a SEBI registered online bonds platform that educates and brings access to a wide array of bonds.&nbsp;<a href="https://www.jiraaf.com/app/signup?referrer=JR7542">Sign up</a>&nbsp;today to explore diversified fixed income investment opportunities to support your goal-based wealth creation journey. Start investing!</p></blockquote></figure>
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<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-1" href="#What_is_Public_Provident_Fund" >What is Public Provident Fund?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-2" href="#What_is_the_Employees_Provident_Fund" >What is the Employees Provident Fund?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-3" href="#What_is_the_National_Pension_System" >What is the National Pension System?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-4" href="#Returns_Comparison_PPF_vs_EPF_vs_NPS" >Returns Comparison: PPF vs EPF vs NPS&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-5" href="#Liquidity_Lock-in_Period_Comparison_PPF_vs_EPF_vs_NPS" >Liquidity &amp; Lock-in Period Comparison: PPF vs EPF vs NPS&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-6" href="#Taxation_Deductions_Under_80C_80CCD" >Taxation &amp; Deductions Under 80C &amp; 80CCD&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-7" href="#Comparison_Table_All_3_at_a_Glance" >Comparison Table: All 3 at a Glance&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-8" href="#Should_You_Choose_One_or_a_Mix" >Should You Choose One or a Mix?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class="ez-toc-link ez-toc-heading-9" href="#FAQs" >FAQs&nbsp;</a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-10" href="#Can_I_invest_in_all_three_schemes" >Can I invest in all three schemes?&nbsp;&nbsp;&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-11" href="#Is_NPS_better_than_EPF_for_retirement" >Is NPS better than EPF for retirement?&nbsp;</a></li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class="ez-toc-link ez-toc-heading-12" href="#Is_PPF_enough_for_retirement_saving" >Is PPF enough for retirement saving?&nbsp;</a></li></ul></li></ul></nav></div>


Personal Finance

Personal Finance