3 Apr 2009

Long term Savings plan

Apart from all those investment plans i had posted earlier, all i mentioned was about investments with just speculations of what the yield will be. In this post, the yield is perfect and do not depend on market conditions whatever.However I would like to point out the fact that, this is a savings plan for your future needs and not for meeting short term needs and would depend heavily on the HR or Finance dept.

The plan is simple. Every organization has Employee Provident Funds( EPF) which is 12% of basic salary and gets deducted every month. The organization will chip in another 12% for you in the EPF and thats how it works. First inquire the HR or Finance department about the terms and conditions of the EPF. If there is an option provided, raise the amount you invest every month for EPF to say 15-20% of your basic salary. The organization should agree to invest the same amount in your EPF fund. That way, your tax is taken care of to some amount and your savings gets increased manifold without even worrying about it.

The advantage of EPF is that its tax free. ie you will get the full amount.But there may be some HR policies which state a minimum amount of time to be kept before its tax free (maybe min 3 years). You will be able to utilize this fund when you change the organization or when you retire from that organization. You do not have to go anywhere for your tax savings, if long term saving is what you have in your mind.


comments powered by Disqus