Physical assets are tangible assets that can be seen and touched, with identifiable physical presence. Their value typically appreciates over time. However, they can be harmed by natural disasters. Financial assets are intangible and cannot be physically seen or felt, existing as documented ownership. They are protected from physical harm and help finance economic activity. The National Pension System (NPS) is a retirement savings scheme regulated by PFRDA. Contributions are invested in three asset classes with different risk-return profiles. Account holders must withdraw a portion of funds at retirement, with options to withdraw earlier or pass the full amount to nominees.
2. Physical assets are tangible assets and can be seen and
touched, with a very identifiable physical presence.
Return is usually in the form of appreciation over time.
Physical assets are basically preferred by investor due
to their tangible nature.
Physical assets can be harmed by natural disaster.
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3. Financial assets are intangible, meaning that they
cannot be seen or felt and may not have physical
presence except for the existence of a document that
represents the owners.
It is intangible in nature.
Protected from physical harm.
Help in financing the economic activity.
Encouraged by government over physical assets.
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5. Launched in May 2009 is regulated by PFRDA. (Pension
Fund Regulatory and Development Authority).
Pension Fund manager invest these fund into 3 different
class:
Asset Class E-Invests predominantly in the equity market.
There is high return and high risk.
Asset Class C-Invests in fixed income instruments other
than Government Securities. Risk is medium in this
category.
Asset Class G-Invests in Government Securities. So lower
risk and lower return.
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6. While investing in NPS a number is generated that is
known as PRAN ( Permanent Retirement Account
Number)
There are two types of account under NPS:
Tier 1 account : The amount invested cannot be
withdrawn before the end of the term.
Tier 2 account : The amount invested can be withdrawn
to meet any financial contingencies.
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7. There are two different options to choose regarding
allocation.
Active Choice-You have the option to choose your
investment among E, C or G asset classes. However, if
you opted for E asset class, then the maximum equity
exposure is 50% only.
Auto Choice-If you don’t want to take active part in
switching asset class, then PFRDA will do it according to
your age. It is predefined.
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8. Once you attain the age of 60 years, you can withdraw up to
60% of accumulation as lump sum and rest 40% will be
converted into pension.
If you want to exit from NPS before 60 years of age, then
you are allowed to withdraw only 20% accumulated
amount. You have to buy a pension product with that 80%
fund.
However, in case the death of the subscriber, a nominee is
allowed to withdraw 100% of NPS.
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9. Real Estate holding in physical form.
It is preferred by investors.
Real estate Mutual Funds are also permitted to issue.
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10. Aditya Birla Real Estate Fund.
HDFC Property Fund.
ICICI Pru India Opportunities Real Estate Fund.
Everstone Horizon Realty Fund.
Birla Sun Life Global Real Estate Fund.
Secura India Real Estate Fund.
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11. It is a hedge against Inflation.
Holding gold in the physical form.
Holding gold in the financial form.
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