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NPS Investment Option: Understanding Auto Choice and Active Choice

National Pension System (NPS) offers two distinct investment options: Active Choice and Auto Choice. Each option caters to different investor preferences, risk appetites, and levels of involvement in managing their investments. <br><br>To know more, <br>Read PDF and Visit - https://www.utipension.com/

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NPS Investment Option: Understanding Auto Choice and Active Choice

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  1. NPS Investment Option: Auto Choice and Active Choice Understanding Auto Choice and Active Choice Active Choice Auto Choice Feature Investors with a good understanding of asset allocation and market conditions. Investors prefer a hands-off approach with automatic adjustments. Who it’s for Subscribers can allocate funds among asset classes based on risk appetite. Automatic allocation based on the subscriber's age with predefined strategies. Flexibility Full control over investment strategy. Risk-appropriate adjustments as per age. Pros Potential for higher returns with equity exposure. Simplicity for investors avoiding allocation decisions. Automatically adjusts risk exposure as retirement approaches. Requires comfort in making investment decisions and managing market risks. Risk Tolerance Those wanting to actively manage their portfolio with a higher understanding of market risks. Who Should Choose Those desiring automatic, age-based allocation without constant management. Higher control and equity exposure potential. Less control; equity exposure balances as per age. Risk Appetite Active Choice Investment Control: Subscribers decide the allocation percentage across four asset classes: Equity (E): Up to 75% until age 50, tapering down thereafter. Corporate Debt (C): Up to 100%. Government Securities (G): Up to 100%. Alternative Investment Funds (AIF): Maximum of 5%. Target Audience: Ideal for those who are knowledgeable about financial markets and prefer to manage their investments actively. Auto Choice Lifecycle Approach: Funds are allocated automatically based on the subscriber's age: Younger individuals have higher equity exposure. As the subscriber ages, the allocation shift towards safer instruments. Available Funds: Subscribers can select from different lifecycle funds (e.g., LC25, LC50, LC75) that adjust automatically according to age. Target Audience: Suitable for those who prefer a passive investment strategy without the need for constant monitoring.

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