saving plan

We work to earn money, and investments work to make money for us. Understanding the potential of utilising the portion of funds for the investment purpose the youngsters are looking for ideal ways of getting returns on their investments by saving the money after retirement. There are several investment schemes to get a good return, and however, if you want to invest your funds in a lesser risky instrument, you can undoubtedly choose between EPF, PPF or VPF. 

The current pandemic has shaken the entire economy. All the economists have painted a grim picture of the whole economy. With the wave of shut-down, the GDP has dropped statistically, 

The rating agencies, investment banks, and the multilateral agencies have drastically shown a downfall with the entire year growth. This brings us to the point of realization that savings are an integral pathway. We must have saved money. Starting a savings scheme now is also a viable decision. This is an excellent time to introspect deep within our financial life and plan and budget accordingly. COVID has stemmed us to realize the difference between necessity and survival. PPF is a long term saving scheme open to all. Savings is not a deduction from salary; instead the money accumulation will give you more returns. Good savings can protect you in case of the uncertain situations that life may throw at you.

Making the best decision: EPF v/s PPF v/s VPF

Understanding fundamental concepts:

What is PPF: Public Provident Fund is the government-backed investment scheme for investing your funds for long-term. The lock-in period of investing in PPF schemes is 15 years which can be further continued in a block of 5 years. To open a PPF account, you can start with an investment of Rs. 500 and can invest up to Rs. 1.5 Lakhs in a financial year. You can invest in the Public Provident Fund Post office scheme, or open a PPF account by visiting the bank or online. 

What is EPF: Employment Provident Fund or EPF is the retirement-corpus scheme, where a fixed percentage of the basic salary of the employee is contributed by the employer and employee in the EPF account. The employer and employee each have to add 12% of the employee’s salary. 8.33% of the employer’s contribution is, however, contributed to the EPS, which can be withdrawn only after retirement.

What is VPS: VPS is a voluntary investment scheme, in which employees can save their funds after making contributions for the EPF accounts. They can contribute up to 100% of their salary in the VPS account.

The table below summarises the key differences between the three investment schemes:

Point of differenceEPFPPFVPF
ApplicabilityFunds in the EPF can be invested by the salaried individualsAnyone between the age of 18-65 years can invest in a PPF account Only salaried individuals can invest in the VPF accounts
Opening AccountYou can open an EPF account by registering with EPFOYou can open a PPF account through banks, post offices or online through the bank website.You can voluntarily contribute for a VPF account on the online portal of EPFO.
ContributionEmployer and employee each contribute 12% of the basic salary of the employeePPF account holders can invest up to Rs. 1.5 lakhs in a financial year.Employees can contribute up to 100% of their salary towards the VPS account
Interest rate EPF Rates are revised every year and as per the revised rates, the employees can interest up to 8.5% on their EPF fundsAs per the new rates applicable for this quarter, the interest rates for PPF accounts stands at 7.10%.Similar to EPF accounts, the interest rates on VPF accounts stands at 8.50%.
Duration of investmentThe funds in the EPF accounts remain active till the retirement. The amount gets transferred if you switch a new jobThe lock-in period of PPF accounts is 15 years. However, you can extend the maturity period in a block of 5 years.The funds in the VPF accounts remain active till retirement. The amount gets transferred if you switch a new job
Tax benefitsYou can earn tax deductions on EPF account if you have served the organisation for a tenure of 5 yearsPublic Provident Funds is an EEE scheme. It signifies that you can get tax benefits on the funds invested, the earned and the amount received at the maturity of PPF accounts.You can earn tax deductions on EPF account if you have served the organisation for a tenure of 5 years

The significant advantage of investing in a PPF account is its tax benefits. Also, anyone can invest in a PPF account for the long term, unlike the EPF and VPF accounts which can be opened only by the salaried professionals. 

All of the three medius PPF, VPF and EPF, give good returns. A ppf is along-term, and EPF renders value more on the employability. Let us see how a VPF can overtake the other two. 

First of all : 

VPF gives a higher rate of interest in the ratio of all 3

  • n analysis of interest rates shows VPF has always given a higher interest rate than that of PPF
  • VPF is equal to EPF, and it is deducted from your salary and deposited in your salary with the consent of the prospect.

Well, making a decision to take over an investment in the field of savings is considered to be a viable option. A tax-deduction is a great sparky way to address things. It is really very important to plan the advances in a year’s end than to wait for the year’s end. The first and most important thing is to compare all the benefits and features of all the different banks. 

Let us gauge through proper representation of all the plans –  

Well, PPF is a safe, paced program. It is a long term plan and can also be used in the form of retirement; In case of  EPF, the employer can also deposit the money. 

A vpf is restricted to salaried people while anyone can open a PPF. 

Make a good and a safe investment choice !