@raulcraven Agreed, I believe NPS Tier 2 is a fine option for long term portfolio. Additional points in favor of NPS (both Tier1 and Tier2):
- We can trigger a manual rebalance twice a year without tax penalty. In the traditional asset allocated portfolio, a yearly rebalance will necessarily involve taxation.
- Debt portfolio has good credit quality as per mandate. We don't have to track the credit risk too closely.
I made a small investment in Tier 2 around Jan-21 to track its performance over time. Since NPS limits maximum equity exposure to 75%, the right comparison is with a balanced fund.
The following are the results and XIRR comparison with what I would have got with other investment options. Overall, I see that it's able to match a balanced fund very well.
Total Portfolio Cost 100,000
Total Portfolio Value 118,424
Total Gain/Loss 18,424
XIRR - Portfolio 30.04%
XIRR - NIFTY Tracker 37.66%
XIRR - Gold Tracker -7.86%
XIRR - Balanced Tracker 27.49% (70% Nifty, 30% Bond ETF)
XIRR - Edelweiss BA Tracker 30.51%