Want to become a crorepati in the long run? You have to believe in long-term saving instruments. One of them is Employees’ Provident Fund (EPF) which involves the contribution from both employee and employer at a certain organisation. For now, when you receive your salary slip, you must be feeling low as your in-hand salary gets reduced by several deductions. However. EPF deductions can actually make you a crorepati in the long term.
This cannot be easily believed as the contribution every month is actually a small amount. But there is a catch. Even if the interest rate offered is low, it is important for you to understand that the employer also makes an equal contribution towards your PF account and if you consider a compounding rule, then you will get a lump sum amount from the Provident Fund when you retire.
The EPF fund generally gets an interest rate of 8.5 percent for the financial year 2020-21 and this is generally higher than many fixed deposits on several banks and many government schemes available in the market. In 35 years from now, an individual can get a massive amount of Rs 1.65 crore at the same interest rate. The interest earned on EPF deposits is completely tax-free.
To get this kind of money, it is important to note that you don’t withdraw money from your PF account at all before your retirement. Also, if you withdraw any money from EPF within five years of joining an organisation, then it becomes taxable and you should always transfer your money to the new account when you join a new organisation.