Investing Vs. Saving: Why You Should Invest Your EPF Amount?


People often lack clarity about saving and investing and often use it interchangeably. Savings is the money that you keep aside to meet emergency cash requirements or short-term expense like a vacation, school fee, etc. It usually lies idle in your savings account. While investing means putting your money in assets that can generate future income. These assets are stocks, fixed deposits, mutual funds, real estate, gold, etc.

EPF is an investment which falls under the investment category. If you keep the EPF amount in the savings account, it will not only fetch you a lower interest rate but you will also be tempted to withdraw it for every little financial need. Consequently, you will reduce your EPF corpus which otherwise could have got bigger had it been invested. Moreover, when the inflation is high, you might even end up receiving negative returns from your EPF account.

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The benefits of investing your EPF after withdrawal are:

  • Earning a regular stream of income.

  • Earning interest on the principal amount.

  • Build a corpus for future years.

  • Reinvesting the interest income and multiplying your earnings further.

You should do a provident fund balance check to get a fair idea of how much amount you will get upon withdrawal and how much you can invest. You can check the balance by:

  • Logging into EPFO portal.

  • Sending an SMS as ‘EPFOHO UAN ENG’ to 7738299899 (ENG for English language, MAR for Marathi, etc).

  • Giving a missed call to 011-22901406.

  • Checking on EPFO app.

Please note that your Universal Account Number (UAN) should be activated by your employer and should be linked to KYC details. You also need to register the mobile number which you want to use to check balance and receive information on EPF.

You can invest part of EPF in capital income assets such as stocks or mutual funds, depending on your risk appetite. However, you should ideally invest a sizeable chunk of EPF amount in fixed deposit for safety and good returns.

Why Invest EPF in FDs?

  • Assured and Stable Returns

Your principal amount stays intact and the FD interest rate is usually fixed for the tenor you choose.

  • High Safety

FDs are not vulnerable to market volatility. Moreover, FDs are issued by banks and NBFCs which are governed by the Reserve Bank of India and hence safe.

  • Liquidity

You can encash FDs prematurely in the times of need by paying a small amount of penalty. You will get both the principal amount and interest earned till the date of withdrawal.

There are many banks which offer healthy interest rates. You can also consider company FDs. For instance, Bajaj Finance offers FD interest rate up to 8.05%, which is higher than many banks. The investment risk is very low because Bajaj Finance FD has stable ratings from CRISIL and ICRA stable ratings.

Bajaj Finance FD offers several value-added benefits that are usually not available with bank FDs, such as-

  • Multi-Deposit Facility: Invest in multiple deposits with flexible tenures and interest payout frequencies through a single cheque payment.

  • Systematic Deposit Facility: Invest in 6 to 48 small monthly deposits instead of a lumpsum amount.

  • Periodic Payouts: Interest withdrawal on monthly, quarterly, half-yearly and annually.

  • Auto-Renewal: FD gets reinvested automatically on maturity with an additional interest rate benefit.

  • Invest Using Debit Cards: Invest in FD with your debit card.

Your EPF amount is hard-earned money. Invest it wisely in a safe and fixed income instrument like FD.

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