EPFO: While making money is super important, putting it away in the right spots is just as vital. Regular investments make it easier to prepare for unexpected expenses and retirement. The Provident Fund (PF) offered through government schemes can really help with this. If you’re earning Rs 50,000 a month, you could end up with over Rs 5.5 crore in the long run.
What’s EPFO and how does it work?
The Employees’ Provident Fund Organisation (EPFO) is a government agency that manages a provident fund scheme for workers. This scheme is particularly advantageous for those in the private sector. Each month, 12% of your basic salary is deducted, and your employer matches that amount. This means a total of 24% is added to your PF account every month. Over time, this consistent investment builds a substantial retirement fund.
The government determines the PF interest rate annually. Right now, it’s set at 8.25% per year. This interest is compounded, which helps your savings grow significantly over time. For instance, if you earn Rs 50,000 and your salary increases by 6% each year, the amount you put into PF will also rise. The longer you invest, the more interest you’ll earn.
How do you reach that Rs 5.5 crore goal? Let’s break down the math
Imagine you start working at 22 and keep investing in PF for 60 years. With a salary of Rs 50,000, you’ll be putting Rs 24,000 into your PF account each month (that’s both your contribution and your employer’s). After 38 years, your total contributions will be around Rs 1.36 crore. With the 8.25% annual interest, the interest alone could grow to about Rs 4.20 crore. So, by the time you retire, you could have roughly Rs 5.56 crore in your account.
It’s clear that regular investment, long-term investment, and the effect of compounding can turn even a modest-paid individual into a millionaire. Therefore, consistently investing in schemes like PF, starting from the early years of employment, can prove to be a very wise move for future financial security.
Meanwhile,
The Employees’ Provident Fund Organization (EPFO) is preparing to launch a new withdrawal feature that will allow EPFO members to withdraw their provident fund in real time using UPI. Government sources said this functionality is being worked on for release soon.
According to a report, the Ministry of Labor is also working on a system that will allow people to instantly withdraw up to 75% of their EPF balance through UPI. This service will be available through a new mobile application as well as a dedicated window on the EPFO portal. The tentative timeline for the launch of this application is April.
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