When I posted my 88% solution to all your investment problems, there were a few protests. Like,
Sanjay comments, for example I think that Equity diversified funds should be in the list and NPS not on it. Dislike NPS due to EET treatment as well as the non flexibility of not being able to get all of my money back on maturity.
The reason I like NPS is because of the low cost and that it takes care of your asset allocation needs and also locks up your money for your retirement. So if it doesn’t give you all the money back at maturity, it’s for a valid reason. The tax treatment is at too distant a future to affect our decisions, IMHO. Who knows what tax treatment will we have for our other investments in the future. If you look at their cost structure, it looks better than ETFs too!!
Equity diversified funds is highly recommended. But after you get your feet in the water and learn some swimming!! You need to identify the right equity fund, that suits your investment objective and has a decent fund manager. It’s not that easy.
Well, the reason I am writing this post is because of the new Direct Tax Code (DTC) and that they have given a thumbs up for the NPS.
The government has proposed to bring long-term savings schemes like the NPS under the EEE (exempt-exempt-exempt) regime.
At the same time, the government has sought to levy tax on capital gains arising from sale of investment assets such as equity shares of a listed company or units of an equity-oriented fund, which are held for more than one year.
So the DTC has given a boost to savings schemes like the New Pension Scheme (NPS) and Public Provident Fund (PPF) as compared to equities and equity-linked products.
Has the 88% solution worked up to become a 95% solution!! 
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What is EEE?
http://www.etaxindia.org/2009/08/what-eee-or-eet-or-ett-in-terms-of-taxation.html
Ranjan,
A good informative blog about NPS…well i just had a view that we can take NPS as a good pension fund but in the long run a well planned MF or ULIP definitely adds value to the portfolio as NPS restricts equity to 50% which reduces earnings to a great extent. Hence a regular fund is a must…any suggestions???
DAJ also has been working for quite sometime now to help people invest in improving their Financial IQ…Visit http://nobleconsultants.blogspot.com/ for providing your valuable comments
Dear Ranjan,
Thanks for sharing wealth of information on Personal Finance. The 88% solution is neat and will hopefully work. I am awaiting your detailed post on NPS and how to participate in it. Thanks for sharing.
Regards,
Shailesh