The Employee Provident Fund which is popularly known as EPF is a long-term investment fund gathered overtime of an individual’s life as a salaried employee. This fund is a retirement initiative for the employee. The EPF provisions have been etched out in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is in the law itself where it clearly stated that during the tenure of an individuals’ employment, 12% of the employee’s basic pay + DA would be contributed towards the PF account. Also, the employer has been directed to contribute another 12% of the basic salary of the employee + DA. The contribution made by the employer is distributed between the EPF and EPS funds of the employee and it is about 3.67% that is contributed to the EPF solely.
Moreover, the EPF account has many benefits including the interest that is incurred which ultimately becomes a profit from keeping the fund intact. This income that one gets from the EPF is exempted from tax. An employee is given the option of withdrawing a part of the fund for reasons like marriage, home loan payment, education, medical emergency, and for buying land under certain conditions at times of need. The EPF, after maturity, is liable to get rewards also.
Best Investment Options For EPF
1.Fixed Deposits: Fixed Deposit accounts can be opened at any bank and the entire EPF amount can easily be deposited there. The interest rate is higher than any form of depository accounts and it is very secure. Moreover, Fixed Deposits are very stable and are not affected by market trends or forces.
2.Real Estate: The individual can invest a lump sum of the EPF into buying lands or houses. This investment will not only incur the highest returns but also can provide infrastructure for growth. The price of land always grows higher and that is an assurance which is needed at the age of retirement.
3.Stocks & Mutual Funds: After retirement, one can easily invest the EPF amount into share trading and mutual funds. This will not only keep the person engaged but also will help create a place for income generation even after retirement. Of course, one needs to research and be aware of market trends and events before and after investing in stocks and mutual funds as both get considerably affected by it. Moreover, the assistance of a broker or a fund manager might be needed for this kind of investment.
4.Govt Schemes: There are many govt schemes that help the person to invest and later get a good return on completion of its tenure. Senior Citizens Savings Scheme is one of the options where 8.3% interest can be incurred and the tenure is of 5 years which is also renewable by another 3 years. Moreover, there are other schemes like Post Office Monthly Scheme and Post Office Time Deposits are also places of investment which stable, with no risk and good returns, perfectly suited for post-retirement investment.
Investing your EPF funds in a successful variation of these options will help you manage your post-retirement life comfortably. By selecting the correct combination of investment choices, you will build a sound investment portfolio that can provide you with income security and financial growth over your entire retirement period.