Retirement Fund: Do you know the difference between PPF and EPF, you can invest in both together

PPF And EPF: After carrying the responsibility of home and family throughout life, a person wants to enjoy retirement as per his wish. Most people daydream about fulfilling their remaining hobby aspirations in retirement. For which it is necessary to be financially capable. Financial feasibility is essential in case of emergencies, medical as well as to enjoy a comfortable retirement.

While employed, people make PF deductions for retirement in the hope of building a larger corpus for retirement. But do you know that most of the companies invest in EPF only. Employees can invest in PPF to create a large amount of wealth for retirement. Investments can be made simultaneously in both these accounts.

Your and your company’s contribution to EPF is mandatory. Whereas investing in PPF is not mandatory. This is a voluntary scheme. In which you can invest as per your wish.

EPF

It is an indispensable retirement savings plan. Both the employee and the employer contribute to EPF. The share of both is decided according to the salary structure. From which you can withdraw some amount during emergency. The entire amount can be withdrawn only after retirement.

ppf

Salaried people can invest in this scheme with the aim of creating a good fund after retirement. Which also helps in reducing taxes. The minimum lock in period of PPF is 15 years. PPF is a long term investment plan. PPF can be opened by any person other than a salaried person.

PPF vs EPF

The interest rate on EPF is 8.25 percent and the interest rate on PPF is 7.1 percent. The government releases EPF rates every year. This year the rate of EPF is higher than PPF. When you leave the job, you can withdraw the amount from the EPF account. While PPF has a lock-in period of 15 years, the amount cannot be withdrawn. You can take loan against PPF. Whereas in EPF, some amount can be withdrawn for personal needs. The interest earned on PPF is tax free. Whereas deduction is made in EPF under Section 80C of the Income Tax Act 1961.