Whether you are doing a government job or a private job, everyone worries about a better future. This is why people invest in mutual funds, the stock market, and different schemes so that they can have a good amount of money at the time of retirement. But what if we tell you that only with your PF money, you can get a fund of crores by the time you retire? Let us explain the full calculation to you.
A fund of more than 2 crores can be created
EPF (Employee Provident Fund) is an investment that is automatically deducted from the salary of every employee. Over time, this small saving becomes a big fund. For example, if your basic salary is ₹30,000 and you contribute 12% to EPF, you can create a fund of ₹2,17,24,737 by the time you retire.
How this calculation was done
In this calculation, it is assumed that your current age is 25 years and you will work till the age of 60. The annual interest rate of EPF is taken as 8.25% (which can change). A 5% yearly increase in your salary has also been added. Along with this, the 3.67% contribution made by your company is included.
Using an EPF calculator, you will see that in 35 years you contributed a total of ₹54,06,168. You earned ₹1,63,18,569 as interest. In this way, by the time you retire, the total fund becomes more than ₹2.17 crore.
Big benefit of small savings
This example shows that even with a low income, if you contribute to EPF regularly and do not withdraw it, you can create a big fund by retirement. EPF grows faster because of compounding.
Do not ignore EPF
In today’s time of inflation and uncertainty, EPF is a safe and good-return investment. It is especially useful for private job holders as it can give financial security after retirement.
To get the full benefit of EPF, do not withdraw it before retirement. If you change jobs, transfer your EPF account and keep checking your contribution and interest details regularly on the EPFO portal or app.