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POSTED BY ON November 17, 2010 4:46 pm COMMENTS (3)
I recently switched job, and now in my new organisation i have two options. And in both cases my contribution will be matched by my employer. –
(1) Opt for Min. Provident Fund (EPF) deduction and increase my montly take home salary
(2) Opt for Max PF deduction (12% of Basic Salary)
Is it a good idea to go for Option 1 and invest the difference in a diversified Mutual Fund. Also, assuming that I stick here for 3 yrs, what is the kind of return that is expected ?
Thanks
Ashutosh
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Thanks Manish. Even I was thinking on the same lines, however wanted an expert opinion 🙂
Thanks Dominic. I am in the process of getting the transfer done. My only concern has been that PF is not a liquid asset. However, looking at it from a long term perspective, it is a forced saving and surely (atleast in my case) is the sole contributor to the debt portion of my portfolio 🙂
Also i suggest you move/transfer your previous Job PF into the new PF account. That will also earn 9.5%. you’ll know for sure that this is safe and it will become your debt portion of your portfolio.
Ashutosh
You should know that your employer will also contribute the same amount as you (max 12%) , so if you are contributing 1000 per month , your employer will also add 1000 to it , on the other hand if you put 5000 , your employer will also put 5000 . Hence its dual benefit to have EPF.
So I would suggest better contribute your 12% salary in EPF, This is a kind of forced saving which you will do , for equity you can always invest outside of this .
You will get the returns as per determined by the EPFO, which stands at 9.5% for the current year .
Manish