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Why EPF and PPF Are Not Enough for Your Retirement Corpus

Aug 10, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

The interest rate on Employees’ Provident Fund for the financial year 2017-2018 was lowered to 8.55% from 8.65%. Products like PPF also have seen a decline in interest rates, and at present is about 7.6% now. Most Indians still prefer fixed income products to meet long-term objectives like retirement. Except that these long-term, tax-economical products are now providing lesser yield in comparison to equity investments. What then should you do if you are looking to save for retirement?

1. Fixed deposits, savings accounts offer better returns

When you compare to EPF and PPF, fixed deposits offer far better rewards. The interest rates are competitive and you get assured returns on them. You can only withdraw the money before maturity so it is perfect if you are considering it for your retirement. What makes FD a good option is that you can also take a loan against it for a lower interest rate. You will continue to earn returns on the FD even with a loan against it.

2. Equity offers better returns

Assume you have 10 years left for retirement; you could invest about 80% in equity. If you are worried about market fluctuations, look at investing in large and mid-cap funds using systematic investment plans, which is the safest way to invest in equities. Also, keep in mind that investing in equities is riskier than ULIPs and you will have to pay the long-term capital gains tax (LTCG) on equity investments.

3. NSC offers fixed returns

The rates on EPF and PPF are subject to changes every year. However, avenues like the National Saving Certificate (NSC) offer better returns, as the earnings rate is the same throughout the tenure. It is also backed by the government and has a lower lock-in period. The current rate is 7.9 % and the interest on almost all the years is tax-free. However, you will be taxed for the last year. You can also use it to secure loans.

4. ULIPs are a good option

If you are worried about investing in equities because of the LTCG tax, you can invest in a ULIP instead. Not only does this offer tax-free returns, it also offers you insurance coverage. Most investors are moving towards ULIPs due to its dual benefits.

5. Gold, a lucrative investment option

The value of gold is known to increase quickly, so you can even invest in gold investment options like gold ETF, physical gold, gold mutual funds, gold deposit schemes etc. However, gold is an expensive investment and prices are subject to fluctuation. Tread carefully, although lucrative, it is still a risky investment.

6. Bonds also offer good returns

Bonds are an option for those looking for good returns. There are many bonds that provide a high rate of return on investments. For instance, there is a bond offering an interest rate of 7.70% at present. This is considerably a safe option as the government regulates these bonds.


If you want to accumulate more wealth over the long-term, it is important for you to look beyond EPF and PPF. Invest in the above options and accumulate a larger corpus for your retirement.

Advt. no.:  IA/Jul 2018/4249


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