Should EPF contribution be counted as debt investment ?

POSTED BY Nikhil ON October 22, 2014 12:11 pm COMMENTS (5)


I am regular investor in MF and PPF schemes. Recently I tried to figure my debt and equity portfolio allocation. I tried to include my PPF, EPF (myself and employer) in debt. With that I got 50% debt allocation as EPF contribution was made regularly for last few months by me and my employer.

Now coming to the actual question. I have read about portfolio balancing and I more or less agree with a heavier equity allocation in younger days. So I wanted to have a 75-25 portfolio in favour of equity. The problem arises whether I include EPF contributions or not in calculating that.

So when they say that keep 25% of your investments in debt; do they (financial advisors) mean to include your EPF as well ? Coz EPF alone fills up my 25% quota. So should I be investing whatever I get in equity alone ?

5 replies on this article “Should EPF contribution be counted as debt investment ?”

  1. Lokesh Jain says:

    Hi Nikhil,

    Yes. You got it right. PPF is definitely the best instrument in the market. But just to put it, some money should also be in FD which is again easily liquidable as emergencies wont warn you before coming. And also definitely keep in mind, keep reducing your equity exposure according to your age. Well thats the best formula.

    And yes, to other members – Hemanth & Ajay – Yes, EPF is a debt investment definitely and we all know that. But it is not liquidable immediately. Rather it takes years to liquidate. Hence, while calculating the portfolio, that is not included by me. Rather it is counted in the retirement corpus only. Thats the best way to do it.



  2. Ajay says:

    Count it under debt portion for your retirement portfolio.

  3. Hemanth says:

    EPF comes under debt

  4. Lokesh Jain says:

    Hi Nikhil,

    Guess you read a lot about investments and its awareness. Well, thats really good for you. This confusion is there and different advisors would recommend different ways to allocation. As far as my view is concerned, I would not calculate EPF in the allocation as EPF is not easily liquidated. You only get it when either you encash it while leaving one job and getting into other, or when you retire finally from your job.

    Debt allocation is always suggested as there should be some fixed investments which can be easily liquidated without any potential loss (which is there in equity).

    Hope your query is resolved.


    1. nikhil141088 says:

      Thanks Lokesh for your answer.

      So going by your advice of taking only easily liquefiable instruments in debt portfolio excludes both EPF and PPF. I blv PPF is an excellent debt instrument, but not easily liquidated. And the remaining ones like FD and savings account aren’t promising in terms of returns and tax.

      So, keeping some money as your emergency contingency fund in a easily liquefiable debt instrument like liquid fund should serve the purpose of debt allocation. Also this is assuming that a health and a term insurance is already taken.

      Would appreciate your view on this!


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