PERFORMANCE OF MODERN INVESTMENT OPTIONS FOR RETIREMENT PLANNING: NPS VS MFS (EQUITY SCHEMES)

Abstract

Personal finance is a part of financial planning and encourages people to save and invest for future goals like education, marriage, health care, home building, and retirement. Many individuals overlook retirement planning as a long-term financial goal. With increasing life expectancy and informal sector jobs rising, sustainable retirement benefits are often unavailable. Thus, proper planning for retirement financial support is essential for comfortable living post-retirement. People often trust government instruments like bank deposits for safety, but private options like mutual funds and NPS can offer better returns. Therefore, it is important to see which fund performs well and which fund can bear the risk. This study evaluates the performance of equity-linked mutual funds and the National Pension Scheme (NPS) in their equity schemes from January 2010 to December 2019. The annualized average daily returns are computed using daily net asset values, and the Nifty 10-Year Benchmark G-Sec is utilized to assess risk. Statistical tools like mean, standard deviation, Sharpe ratio, and Treynor ratio are applied for performance analysis. A T-test checks the significance of differences in returns and risk between the two investment options. The study concluded that investors must assess scheme performance based on risk and return.