Exactly how important your Employees’ Provident Fund (EPF) account can be is highlighted by the fact that you can turn your basic salary of Rs 35,000 into a massive corpus of over Rs 3 crore if you do not in some way break the flow of money into the provident fund (PF). The current EPF interest rate is a whopping 8.25% and we will assume that it will stay that way indefinitely, although it is the government that sets the rate and this can rise and fall accordingly. However, most of the time it has been higher than the rate offered by bank fixed deposits. Of course, in certain instances, EPF interest rate can be beaten by the equity rate of return which can be 10% or more. But in equity there is lots of risk, while EPF interest rate stays steady without any risk at all. It is the ideal money-making tool for the millions of salary earners. Check figures as per EPF interest rate calculator.
So, how can you get over Rs 3 crore from a basic salary of Rs 35000 a month? As per the calculations we have assumed, a person who is 23 years old, starting his professional career and opening his EPF account at this age, with a pay of Rs 35k, and an EPF contribution of 12% will be set to earn a big amount by the time of retirement.
To this calculation can be added the fact that the person will get an expected annual increase in salary of 6%. The age of retirement is taken as 60 years.
Adding it all together via the EPF calculator will give you a massive corpus of Rs 3,54,05,285 at the time of retirement.
The best part for a person with an EPF account is the amount that has been invested by him or her over this period. For this person, the EPF contribution amounts to just Rs 89,44,525. However, the amount he gets courtesy EPF interest rate is massive.
The whopping interest that was received by this person is Rs 2,64,60,760!
Do note that these are estimated returns and they may rise and fall depending on circumstances faced by the EPF account holder.
Check EPF calculation below:
Bajaj Finserv EPF Calculator
Simply stated, this amazingly high amount received by this person was possible only because of the focus and continuity in EPF contribution as well as the magic of compounding.
The amount can increase even more if the EPF account holder manages to secure much bigger salary increments. If the employee is exceptionally talented, then that would be very much in the realm of possibility.
Notably, EPF interest rate of 8.25%, and starting pay of Rs 35000 can lead an employee to accumulate over Rs 3 crore after a set number of years. Check figures as per EPF interest rate calculator. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
