EPF interest rate can definitely provide a bonanza to every employee out there working his fingers to the bone. The idea behind working for someone as an employee is to make sure there is a steady stream of income on which to maintain a certain lifestyle for the family. Expenses are required for food, house, bike, car, phone bill, shopping and much more. However, an employee should be warned that spending the entire in-hand salary is something that is foolhardy. What an employee must do, is ensure that he saves more money apart from the Employees’ Provident Fund (EPF) too.
Every employee in an establishment that has 20 workers will get an EPF account going in his name. While the employee has no choice but to accept the EPF cuts in salary imposed by the employer, there are other savings instruments that he should also opt for. Idea is to save at least 30% of the salary every month irrespective of what is happening around them.
These investments can be in PPF, bank fixed deposits or stock markets. To show you how much the benefit accrues to the employee from just the EPF interest rate, which is currently at 8.25%, we take this example of an ideal employee and take it to its logical conclusion. It will surely make you rush to make further investments elsewhere too.
Let us say that our ideal employee starts his EPF journey at the age of 20. The salary is Rs 20000 (Basic + DA). Now, he gets an increment of 5% in his job on an average. His EPF contribution is 12% and the employer contributes 3.67%. EPF interest rate is 8.25%. The employee works till retirement. After decades of working hard, the EPF calculator shows that the employee will get a massive lumpsum amount.
How much is the EPF maturity amount on retirement? Rs 2,20,10,562! Clearly nothing to be sneezed at. And what is more, if an employee is able to get such a big amount from his EPF, imagine the amount that he can get from other savings tools that may offer much higher returns.
In effect, the EPF lesson to be derived here is that along with the EPF contributions, an employee should pick some other money-making instrument too, to really make himself a crorepati multi-times over.
Note: The amounts mentioned here are estimates and the actual sums will be available in the employee’s EPF passbook.
Don’t be satisfied with just turning Rs 20000 into Rs 2 crore, go for much more, turn yourself into a crorepati multi-times over. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
