Provident Funds
MONEYMONK WEEKLY MESSAGE 10/2019
Provident Funds
Provident funds are meant to be savings for the retired life by contributing from earnings while in working life. In some jobs the employer also contributes to it as per rules along with the employee. Self employed and others who do not have such funds have public provident funds (PPF)option. Those having contributory provident funds can also open PPF accounts in addition. All salaried employees must at least contribute enough to take full advantage of employer contribution if not more.
Armed forces personnel retire early and have to close their provident fund accounts on retirement. They can use PPF account to overcome this premature forced closure
Normal contributions on retirement are often found to be inadequate for a happy retired life. Causes are many. Those who do not have such schemes or are self employed must try and contribute at least 5% of their salary/ income in PPF if not more. Such contributions must start as early as possible.
Good part of these funds is that they are a little difficult to withdraw and have compounding effect benefits, I shall discuss this amazing compounding effect later.
Temptation to withdraw from these funds must be avoided . Any emergency withdrawals from provident funds must not affect your post retirement needs.
Note:
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