EPFO Interest Rate: Most people believe that a large amount of money can be invested every month to prepare a large fund for retirement. In fact, even these small savings can add up to huge funds over time.
EPFO Interest Rate:Most people believe that a large amount of money can be invested every month to prepare a large fund for retirement. In fact, even these small savings can add up to huge funds over time. If you invest in the Employees Provident Fund Organization (EPFO) EPF scheme, even a nominal contribution can create a strong financial security cover during your retirement.
EPF currently earns 8.25 percent annual interest, making it one of the most reliable and secure investment options for working class people. The special thing is that it has interest compounding, i.e. compounding on the basis of interest, so that your savings grow faster in the long run.
Suppose an employee contributes Rs 1,800 to EPF account every month. That means Rs 21,600 will be deposited in a year. If this investment continues for 25 years then the employee will contribute a cool rupees 5.40 lakhs.
However, the real wonder is compounding. The interest earned every year is added to your principal investment and the increased amount is compounded the following year. This process goes on for a long time and turns small amounts into large funds.
If this contribution is maintained at the rate of 8.25 percent for 25 years, then at the time of retirement you can have a fund ready of around Rs 18 to Rs 19 lakh in your account. That means you will be deposited only Rs 5.40 lakh. However, in the form of interest, you can get more than Rs 13 lakh.
