Do you know that by investing just ₹5000 every month, you can create a huge fund of ₹3.5 crores by retirement? Yes, this is possible through EPF (Employees Provident Fund). It is a very reliable and secure retirement scheme of the Government of India, which is operated by EPFO. If you also want to make your future financially secure, then it is very important for you to understand the power of EPF.
What is EPF, and how does it work
EPF (Employees’ Provident Fund) is a government retirement scheme in which both the employee and the employer contribute. In this, the employee deposits 12% of his basic salary and dearness allowance (DA), and the employer also contributes the same amount. Out of this 12%, 3.67% goes to your EPF account, while the remaining 8.33% goes directly to the pension scheme (EPS).
The government pays a fixed interest on it every year. The current interest rate is 8.25%, which means your money keeps growing rapidly every year. This investment is completely safe from market fluctuations.
Investment of ₹5000, Fund of ₹3.5 Crore
Let us understand this with an example. Suppose your salary is ₹64,000, then your basic salary will be around ₹31,900.
Employee contribution: ₹3,828 (12%)
Employer contribution: ₹1,172 (3.67%)
Total monthly EPF contribution: Around ₹5,000
If your salary increases by 10% every year, then the amount going into your EPF will also increase in the same proportion. With a tremendous interest of 8.25%, this amount will keep compounding.
If you start working at the age of 25 and contribute to EPF continuously for 33 years till the age of 58, then:
Your total investment: ₹1.33 crores
Total fund created till retirement: About ₹3.5 crores
In this way, by contributing just ₹5000 every month, you can create a huge fund for your retirement.
Benefits of EPF
EPF scheme is not just a savings instrument, but it also provides the benefits of pension (EPS) and insurance. Therefore, it is considered to be the safest and most reliable retirement plan. It not only gives you financial security but also lays a strong foundation for future needs.
