Starting your EPF journey at the age of 25? That is the age around which most salaried people get to open an EPF account. And whatever else they do, the utmost focus must be put on their Employees’ Provident Fund account as it will provide the kind of money that is dreamed of by most people. With an EPF account, that dream can be turned into reality. Let us show you how through the EPF calculator. Notably, the Employees’ Provident Fund Organisation, aka EPFO manages the PF fund.
The EPF investment of a salaried employee can be easily broken into the contribution part, the employer’s part and the interest granted thereof.
So, start off with the premise that this 25-year-old employee earns Rs 25000 as his basic salary with DA. Most youngsters start with a salary in this range, give or take a few thousand.
The next step that the EPF calculator will take into account is the employee’s contribution of 12% and add a matching contribution (the EPF part and not the pension part) by the employer, which is 3.67%.
Another amount to be factored into this EPF calculator equation is the amount of increase in salary the employee is likely to get annually. This, for a good employee, will likely average out at 7%.
And lastly and most importantly, the EPF interest rate is taken into account. the EPF rate of interest is a high of 8.1%. Do note that this is subject to change and may alter your maturity amount’s value. Notably, at 8.25%, the EPF interest rate is higher than most bank FDs.
Breakup for EPF calculator
Pay: Rs 25000 per month
Age: 25 years
EPF contribution: 12% of basic pay
Annual increment in pay: 7%
EPF interest rate: 8.25%
After the EPF calculator crunches all these numbers, what do you get on maturity when you retire?
Because of the massive EPF interest rate and the long period of investment, the EPF account holder will get a massive sum of Rs 2,41,43,012!
EPF calculator maturity value breakup
EPF maturity amount accumulated by employee: Rs 2,41,43,021
Total investment in EPF by employee: Rs 70,00,556
Total interest earned via EPF by employee: Rs 1,71,42,456
The best part is that the EPF account holder would have earned this huge sum of money without taking any risk in the equity market or any other such investment scheme. Just a couple of things need to be kept in mind and that is not to lose your job and not to withdraw money in between for any frivolous purposes.
A youngster of 25 can start his savings journey with a Rs 25000 salary and get over Rs 2.4 crore, shows the EPF calculator. This is courtesy the high EPF interest rate. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
