If you want more returns than PPF, then Voluntary Provident Fund (VPF) can be a better option for you. In this, you get more interest than PPF and 18 months before PPF, your money doubles.
new Delhi. It is the thought of the jobbers to invest that their money should be safe and their money should be doubled as soon as possible. If you do a job and want higher returns than PPF, then Voluntary Provident Fund (VPF) can be a better option for you. In this, you get more interest than PPF and 18 months before PPF, your money doubles. You do not need to open a separate account to invest in VPF. In such a situation, you must be wondering what is VPF and how can we invest in it.
Here’s how to invest in VPF
Voluntary Provident Fund (VPF) is a scheme of the Employees Provident Fund (EPFO). Employees availing benefits under this scheme can contribute any part of their salary to Voluntary Provident Fund account as per their wish. This contribution should be more than the maximum limit of 12 per cent PF mandated by the government. Let us tell you that the company is not obliged to contribute any amount on behalf of VPF.
There is no need to open a separate account for VPF. An employee can contribute 100 per cent of his basic salary and DA to the VPF. The interest rate on this will be similar to EPF and this amount will be deposited in the account of EPF scheme, as there is no separate account for VPF.
Investment limit
Like PPF, VPF is also an option for risk-free and tax-free investment. If you are planning your retirement then VPF may be a better option for you. The investment limit in PPF is up to Rs 1.5 lakh per annum, whereas there is no such limit in VPF. There is no need to have a separate account to invest in it. An employee can contribute 100 percent of the basic salary and DA to the VPF.
Rate of interest
The rate of interest on VPF is equal to that of EPF. In March, the government’s EPF interest rate was cut by 0.10 percent. At present, the rate of interest on VPF along with EPF is 8.50 percent. Because the amount of VPF is deposited in the EPF account itself, due to this the interest rate of both also remains the same. On the other hand, currently there is a 7.1 percent interest rate on PPF.
keep in mind
that there are restrictions on withdrawals with VPF. The entire amount can be withdrawn only on retirement. You should not ignore this while investing money in VPF.
Know when there will be double money?
A special rule of finance is the rule of 72. Experts consider it to be the most accurate rule, which determines how many days your investment will double. You can understand this as if you invested in PPF and here you get 7.1% interest annually.
– In this case, you have to divide 7.1 in 72 under rule 72.
– 72 / 7.1 = 10.14 years, ie in PPF your money will double in 10.14 years.
At the same time the interest rate in VPF is 8.50 percent. You have to divide 72 by 8.50. 72 / 8.50 = 8.47 years, ie your money in VPF will double in 8.47 years. This means that your money in VPM will double before PPF 1.6 years.
