How to pick the right mix of equity, corporate bonds and government securities in NPS?

On Oct 22, 2025

When planning for retirement, you want to ensure that your investments grow steadily while keeping risks in check. The National Pension System (NPS) offers flexibility to choose between equity, corporate bonds and government securities. But how do you decide the right mix?
If you’re at this stage, then you’re likely wondering:

How much equity is too much for my retirement portfolio?
Should I lean more towards safe government securities?
Will corporate bonds help me strike the right balance?

These are all valid concerns and the good news is that there’s a clear way to approach this decision.

Investment choices in NPS

NPS allows you to invest in four asset classes:

Equity (E): Investments in Indian companies’ stocks. This offers high returns but comes with market risks.
Corporate bonds (C): Debt securities issued by companies. It is more stable than equity but offers moderate returns.
Government securities (G): Bonds issued by the Indian government are the safest option but have lower returns.
Alternative Assets (A): Includes REITs and InvITs but limited to 5% allocation.

To simplify, your main decision is how to allocate your investments among E, C and G. The key is to find a balance that matches your risk appetite and financial goals.

Define your financial comfort zone

Your mix of investments should match your comfort level with risk. Here’s how to assess where you stand:

High risk appetite

If you’re in your 20s or early 30s and comfortable with market ups and downs, then you might allocate more to equity (E) for long-term growth.

Moderate risk appetite

If you’re in your late 30s or 40s then balancing corporate bonds (C) and equity (E) might be a better strategy.

Low risk appetite

If you’re nearing retirement (50+) then security is key and a larger portion in government securities (G) makes more sense.

Consider your retirement timeline

The time left until retirement impacts how boldly you can invest.

If you have more than 25 years to retirement, then you have time to recover from market fluctuations. A higher equity allocation can work well.
With 10 to 20 years to retirement, balancing equity with corporate bonds can provide stability.
If retirement is less than 10 years away, then focus on preserving wealth with government securities.

Which one suits you?

There are two types of investment strategies:

Active choice: Here you can manually decide the percentage allocation for each asset class.
Auto choice: In this case, NPS automatically adjusts your investment.

If you prefer a hands-off approach then auto choice simplifies the process. If you like control, then active choice lets you tweak your portfolio based on market trends.

Optimise based on market conditions

Markets go through cycles and it’s wise to periodically adjust your mix.

When stock markets rise significantly then consider shifting some gains from equity to bonds.
Corporate bonds may offer better returns if interest rates are expected to rise.
In uncertain economic times, increasing government securities can provide stability.

Monitor and adjust over time

NPS allows you to change your asset allocation up to four times a year. This flexibility helps you adjust as your income grows, or financial responsibilities change. This ensures your investments align with your goals as you move closer to retirement. Regularly review to keep your retirement savings on track. By tweaking your NPS allocation periodically, you can stay prepared for the future and ensure steady financial growth.

There’s no one-size-fits-all solution but an informed approach helps you build a strong retirement corpus. Whether you go with active or auto choice, it’s important to find the right balance between equity, corporate bonds and government securities.
A little planning today will greatly affect how comfortably you retire. Get started by using an NPS scheme calculator to explore your options and plan your financial future!