Where to invest my EPF proceeds for Retirement Purpose ?

POSTED BY sairamboko ON March 21, 2014 11:10 am COMMENTS (9)

Hi All. I am in the midst of changing my jobs. My future employer doesn’t have the pension/PF benefits. I have to invest on my own. Also I will be withdrawing my PF amount from my current employer. Two questions:

1. The PF amount which I am going to withdraw is approximately Rs 1,00,000 . I want to use this for my retirement purposes only. Please tell me where should I invest it? – Mutual Funds, Fixed Deposits, etc?

2. Since my future employer doesnt give me pension benefits, how should I deduct myself and invest the deducted amount in which instrument?

Thanks & Regards,


9 replies on this article “Where to invest my EPF proceeds for Retirement Purpose ?”

  1. ashalanshu says:

    Dear Sairam, as you have not completed the 5Y service period rule, the PF redemption is taxable. PPF investment ‘ll not impact the taxability of PF redemption amount. Yes PF investment ‘ll help in section 80C related benefit while calculating your over all tax liability.



  2. sairamboko says:

    Friends. I have one more question here. If i withdraw my EPF proceeds and invest in PPF, will i be taxed. Please note that my PF account is less than 5 yrs old and I am unable to transfer . This is because my new employer doesnt have a presence in India.
    Please help/advice.


  3. ashalanshu says:

    Dear Sairam, if you are agree, invest the PF redemption amount for the long term for your retirement in Eq. MFs. If you do not want the risk of Eq. invest the amount in debt fund.

    From your mly salary, please start investing for retirement as well as other long term goals. I w’d prefer Eq. funds.



  4. sairamboko says:

    Hemanth – I already have a PPF a/c with a sumptuous balance.

    Ashal – Income above 45k per month. Family size- wife and a baby expecting in july. Loans – 5lakhs INR. Assets – have my parents house and a savings of 1lakh. WIll be closing a loan shortly. Investments 3 RDs which will give me 2lakhs in this year end.

  5. ashalanshu says:

    Dear Sairam, what’s your age, income, family size, loans, assets and investments?



  6. sairamboko says:

    Thanks a lot Ashish. I am just 26 yrs old and have a long way to retire. I was thinking of PPF but then till now i have been risk averse. What would be your suggestion for distributing my amount in various funds for a medium risk ?

    1. Hemanth Chandra says:

      PPF is very safe. You just don’t have to worry for the amount you invest in PPF.

      So, please start by opening a PPF account.

      If you wish open a PPF account, please open in SBI.


    2. Ashish Garg says:

      Dear Sai,

      At the age of 26, I feel you should take some risk (as you have time to recover your losses, if any). Suggest you invest some portion of this 1 Lakh in Eq MFs and some in Debt MF.

      For every month, suggest you invest an amount equivalent to your PF deduction in Eq MFs for new few years at least. Then you may wish to divert that amount to a debt fund.


  7. Ashish Garg says:

    Dear Sai,

    If you have enough years in hand to retire and have understanding of Mutual fund investment, please invest the amount in 2-3 MF scheme.
    1. Large Cap fund
    2. Mid and small cap fund or a Balanced fund
    3. Debt fund

    Depending upon your risk appetite divide the money in above funds.

    In case you are not comfortable with investing in MF (fully or partially), you may invest this amount in PPF and then keep on investing some amount (equal to your PF) in the PPF account. This way you will continue to get the Income tax benefit on the amount invested in PPF and is secure also. Only thing here is that investment in PPF account is for 15 years and certain terms and conditions are to be followed while withdrawing money in between these 15 yrs.


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