A lot of young professionals today understand and know the importance of having the right retirement plan. However, given the wide variety of investment options, the selection of the desired retirement plan can be a bit confusing. For investors, who don't wish to put themselves through a massive risk profile, provident fund schemes like the PPF, VPF or EPF, can be great options.
The awesome part is that these schemes are incredibly secure and assure stable returns throughout. As a result, they are ideal for people with long term investment goals like merely saving for the retirement plan. If you understand the difference between the available schemes, it gets relatively more accessible for you to pick the best scheme. So, here we at Savepro will help you see through the differences between VPF and PPF and based on that, you can decide which one of these schemes is most beneficial for you. However, before we jump to the difference, let us understand in brief, what is VPF and PPF. 1. PPF PPF is the Public Provident Fund. It is a scheme that isn’t related to your employer. So, PPF is a government offered scheme. It assures you a fixed return and is targeted towards helping people develop a retirement portfolio. Both non-salaried, as well as salaried individuals, can invest in PPF account. 2. VPF VPF is the Voluntary Provident Fund. It is a voluntary scheme that lets the employees make a voluntary contribution to their PF account after giving away 12% as per the EPF guideline. The interest rate in both EPF and VPF is same, and employees can contribute up to 100% of their salary. Differences between PPF, and VPF a) Applicability In the case of a VPF, only salaried working professionals can invest in this. On the other hand, in the case of PPF, everyone is eligible to open a PPF. You can avail a PPF facility in almost every bank and post office. Further, you can also start your PPF account online. All you've to do is to visit the website of the bank wherein you wish to open the account.Follow the process that follows, and you are ready. b) Contribution For the VPF, the employer has the right to contribute any amount up to a maximum of 100% of their salary and dearness allowance. On the other hand, for the PPF account, the contribution is voluntary, but it has an upper capping of 1.5 lac for a year. c) Returns At present, the interest rate that you get by banks on the PPF account is 8.7%. Since the interest that you get on PPF investment is related to a decade of government bond yields, you’ll experience a change in the interest rate, now and then. For the VPF, the interest rate that is currently offered by the bank is 8.75%. However, here again, there is a revision seen in the interest rate almost every year. d) Investment Duration For the PPF, the duration of the investment is 15 years. Once this period ends, you can further invest your period of investment to another five years. For the VPF, the account stays active until the time you resign or retire. If you happen to make a job switch, your account can be easily transferred to another employer. Related Information - Basic Questions to Ask Before Investing In a Mutual Fund e) Tax Benefits The returns that you get from the investment in PPF are exempt from tax under Section 80C. On the other hand, the gains from the VPF post the maturity are eligible for a deduction as per the Section 80C. Please note that for you to get a deduction, it is essential that you worked with your employer for at least five years. f) Loan Facility The best plausible benefit of the PPF is its loan facility. If you have a PPF account, you can quickly get a loan against investment. If you need a loan, you can apply for it post the completion of 3 years of the investment. The maximum loan amount that you can get is equivalent to 25% of the remaining amount towards the end of the second year. Further, a second loan can also be availed before the completion of the 6th financial year of the investment. Please know that you can apply for the second loan only if you have repaid your first loan. On the VPF, partial withdrawal is permitted, and mortgage can be availed up to 100% of the amount. Making the Decision To be able to accentuate your retirement portfolio, it is a good idea to invest in both VPF and PPF. For opening an account of PPF online, you can opt for any of the top banks in India that gives you this facility. For any more queries, feel free to contact us anytime! Also Visit Listly For More Info
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Our parents, grand parents, and all of our seniors have always advised to “Know your priorities well!”. In all our growing years, each one of us has heard this while growing up. However, priorities may ping your door anytime, at any age!
Let’s explain this by a simpler example that a CA or a doctor can easily afford a holiday to the next tourist spot, but a struggling musician may not. He/she has to work harder to achieve the goal. Henceforth, he/she can further pursue their passion. Savepro makes sure that you meet your financial requirements and you can do future investments easily. #1. If travelling around the world is your calling a) Exotic trip to abroad: Most of us are impulsive travellers, aren’t we? Now that you have become a regular traveller lately, and savings become a little difficult to handle every single time! Hence, you can create an Indulgence Fund which will gain from a monthly SIP from your salary. b) All of you would agree to this that our parents wish to go on a pilgrimage. It can be Mecca or Kashi; you can now easily create a small Pilgrimage fund and gift it to your parents wherein you put 3% of your savings into Debt Mutual Funds. #2. Pre-paying your home loan Emergencies can happen at any unspecified time, to fulfil that you may require a large sum of money and each one of us rely upon loans to purchase things like home or car. Start saving all your money into a Loan Repayment Fund that invests in Equity Mutual Funds. #3. Children's education Every parent wishes to give their child the best education they can provide. This required well-advanced planning. The ideal way to go about this is to create an Education Fund and invest in Equity Mutual Funds. You are then looking at 14-15% returns in less than 10 years' time. Start saving at an early age, so that you can fetch the gains early. You are your own life-saver! For any queries, you may contact us at (+91) 9810634314 or Email us at [email protected] Also Read: Which Option Is Better Mutual Fund/Fixed Deposits ? |
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