If you do a private job, you will get the benefit of Employees Provident Fund (EPF). EPF gets more interest than regular savings schemes. But compared to inflation, the interest on EPF is not sufficient. The same situation is with PPF. Actually, 8.15% annual interest on EPF seems attractive at first glance. But when you compare it with inflation, the actual return is only 1-2%. Whereas in the current era, medical expenses are increasing by about 14 percent annually. Due to which health expenses in future can be higher than savings. Inflation reduces the actual value of your savings over time. So if you are dependent on EPF or PPF, are they not enough?
Actually, most people think that the amount of EPF will be sufficient for retirement. But it needs to be considered deeply. Many chartered accountants (CAs) and financial advisors say that EPF cannot meet all retirement needs.
Why is the EPF amount not enough?
Most of the people in the country are living for 75 to 80 years, that is, even after retirement, they need money for 20-25 years, and currently about 8% interest is being received on EPF. But the rate of inflation is also increasing at the rate of 6 to 7% annually, that is, the actual growth remains very low. The way to spend in the current era has also changed. Now the middle class spends more on their children’s education, car, home and travel. In such a situation, additional savings are decreasing. In such a situation, a proper financial plan is required for old age.
Financial experts say you have to invest 20 percent of your salary with risk. If your salary is 50 thousand rupees, then you should invest at least 20 percent i.e. 10 thousand rupees in mutual funds. That too for a long period. PPF or EPF can be seen as another option.
Then what is the option?
Will investing in mutual funds achieve the target? Let’s understand … If you do a monthly SIP of 10 thousand rupees, then you will get a total of Rs 23,23,391 according to 12% returns in 10 years. While Rs 27,86,573 will get Rs 27,86,573 at 15% annual interest. During this time you will have to invest a total of Rs 12 lakh in 10 years.
But as the investment time increases, returns start surprising. You will become a millionaire according to 12% returns on SIP of Rs 10 thousand per month for 20 years, because you will get a total of Rs 99,91,479 (about Rs 1 crore). At the same time, if you get returns of 15 percent, then you will get Rs 1,51,59,550 in 20 years.
Let’s finally look at the 30 -year figures. If you do a monthly SIP of 10 thousand rupees without stopping for the next 30 years, then you will get a total of Rs 3,52,99,138 (Rs 3.5 crore) at 12% annual interest rate. Now for 30 years, you will get a total of Rs 7,00,98,206 (Rs 7 crore) on an investment of Rs 10,000 for 30 years. That is, when you are 55 years old, you will have more than 7 crore rupees. With this, you can also withdraw money for big needs like children’s education, home, car and marriage of children.
Invest a little in a mutual fund
So if you are depositing some money in EPF or PPF and thinking that this is enough for retirement, then you need to think. You must invest in mutual funds for more returns while fighting inflation. So that there is no financial crisis in old age.
However, financial experts recommend that the income should be increased as well as increase investment. According to the rule, the amount of SIP should increase by 10 percent every year. With this you will be able to achieve your biggest financial goal.
If you start your investment from Rs 10,000 per month and increase it 10% annually, you will get a total of Rs 15,02,22,698 (more than Rs 15 crore) in 30 years. It is calculated according to 15% annual return. Therefore, everyone should think about SIP from the beginning of earning. Large amount can also be raised from small investment. Just savings and strong will is necessary.
