If you have done retirement planning, then your old age will definitely pass peacefully and there will be no tension of money. There are many options which keep you away from tension for retirement. You will get better returns in these options.
Retirement Planning: Old age should be spent in comfort, there should be no tension of money, there should be income every month in the form of pension. Is there any such scheme? Often people search or ask questions before retirement. But, the answer to all these questions is your investment. If you have done retirement planning, then definitely your old age will pass peacefully and there will be no tension of money.
There are many options which keep you away from tension for retirement. You will get better returns in these options. Schemes like Voluntary Provident Fund (VPF), ELSS or Public Provident Fund (PPF) will themselves take the tension of your retirement and will give you only benefits. How? Let’s understand.
What is Voluntary Provident Fund (VPF)?
Only 12 percent of the basic salary can be contributed to EPF. But, there is no limit to investing in VPF (Voluntary Provident Fund). Meaning, if the employee keeps his in-hand salary low and increases the contribution to the provident fund, then this option is called VPF. In VPF also, 8.1 percent interest is being given like EPF. This scheme is an extension of EPF. Only employed people can open it. 100 percent of basic salary and DA (Dearness allowance) can be invested in it.
What should be done for VPF?
You will have to contact the HR or finance team of your company. You will have to request contribution to VPF. VPF will be linked to your EPF account as soon as the process is completed. No separate account is opened for VPF. VPF contribution can be revised every year. However, the employer is not bound to invest in VPF. The employee can only increase his contribution.
What is the benefit of VPF?
If you change your job, you can easily transfer this account. You can also get a loan on this. You can also take a loan from this for children’s education, home loan, children’s marriage. For partial withdrawal of money from VPF account, it is necessary for the account holder to work for 5 years. If it is less than 5 years, then tax is deducted.
The entire amount of VPF can be withdrawn only on retirement. VPF gets the benefit of tax deduction under section 80C of Income Tax Act. The money received on investment, interest and maturity (EEE) is completely tax free. This scheme is very good for retirement planning.
ELSS- How will Equity Linked Savings Scheme give benefit
42 mutual fund companies in the country run tax saving schemes. Every company has ELSS to save income tax. It can be purchased online or from an agent. The one time investment limit for saving income tax is minimum 5 thousand rupees and if you want to invest every month then you can start investing minimum 500 rupees per month. In this, maximum tax exemption of 1.5 lakh rupees can be availed, but there is no limit on maximum investment.
Market linked return is available
The scheme has a lock-in period of 3 years. Later the investor can withdraw the money if he wants. After 3 years, the entire amount can be withdrawn if he wants. There is also an option for partial withdrawal. You can let the remaining money remain in the scheme as long as you want. The special thing about ELSS is that instead of interest on investment, it gives market linked return. In the last 10 years, the ELSS mutual fund category has given a return of about 8.5 percent.
Public Provident Fund- What to do in PPF?
Public Provident Fund (PPF) This scheme can be opened anywhere in a bank or post office. It can also be transferred to any bank or post office. Only 500 rupees are enough to open it. It is necessary to deposit 500 rupees at a time every year. A maximum of 1.5 lakh rupees can be deposited in the account every year. This scheme is for 15 years, so money cannot be withdrawn in between. But, it can be extended for 5-5 years after 15 years.
Loan and partial withdrawal exemption is also available
PPF cannot be closed before 15 years, but after 3 years, loan can be taken against this account. If someone wants, then money can be withdrawn from this account from the 7th year as per the rules. Interest rates are reviewed every quarter. Interest rates can be more or less. Currently 7.1 percent interest is being given. Investing in this scheme gives the benefit of tax exemption up to Rs 1.5 lakh under 80C. Anyone can invest in these.
Where will be the best investment?
All three options have the facility of getting tax exemption on investment. But still, all three are schemes with different benefits. If you are employed, then it will be right to invest in VPF. Because from here you will get more interest than PPF and ELSS. On the other hand, if you can take a little risk, then ELSS is a better option for them.
Money should be invested in it through SIP, in which investment is made every month. This reduces the risk on investment and increases the chances of getting good returns. On the other hand, if you want to stay away from the risk of the market, then investing in PPF will be right.
