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How to get the most out of your PF investment

  • Highlights

  • Re-invest matured PF amount in high-interest investments

  • Pick FDs and bonds to gain from assured high interest returns

  • Choose mutual funds to get high returns in a medium to long tenor

  • Weigh investments basis your financial needs and risk appetite

The Government of India lets you to save a share of your income in government-assured high return investment schemes such as the PFs and bonds. These options park your investment in safety, allowing you to gain better return over a fixed maturity tenor. So, for example, if you are looking at provident fund investments then there are two ways in which you can invest in provident funds: firstly via PPF or a Public Provident Fund account and secondly by EPF or the Employees’ Provident Fund account.

PPF has a long maturity of 15 years, which you can extend by 5 years. On the other hand, your EPF funds will mature as soon as you retire. With such a handy corpus of funds you will want to look at ways in which you can maximise the growth of these funds for wealth creation.

Here is how you can securely park your PF investment to gain bigger returns.

1. Choose FDs to rope in growth for your investment

Reinvest your Provident Fund corpus in FDs to gain assured high interest returns on your investment. Weigh the benefits of cumulative or non-cumulative fixed deposit variants as per your financial needs and interest rates. You can access the interest payouts on your investment on maturity in case of cumulative FDs. On the other hand, you can access the interest payouts as regular income for non-cumulative fixed deposits.

Whatever your choice, in order to maximise your returns on FDs, choose Company FDs from trusted issuers like Bajaj Finance. You can gain high interest rates of up to 8.05% on these Fixed Deposits. Moreover, awarded ICRA’s MAAA (Stable) and CRISIL’s FAAA/Stable Rating alongside the assurance of a high return, these FDs also offer you a range of benefits such as loan against FD, online account management, minimum deposit requirements, and additional interest of up to 0.25% on renewal. Combined with such benefits and regular income assurance, FDs are one of the best ways in which you can maximise the returns on your PF.

How to Grow Your EPF Savings

2. Invest a portion of PF to buy government bonds

Use some of your PF maturity amount to generate high long-term returns via government bonds. Bonds project your investment on a fixed 8% interest rate, which is higher as compared to other prevalent investment avenues. However, the liquidity factor in case of bonds is low and they generally come with a longer maturity tenor of 6 to 15 years.

So, set aside funds keeping this factor in mind as all along the tenor you won’t be able to touch your investment even when faced with financial emergencies. You can choose a range of bonds released by the Indian Government in this regard or select high interest infrastructural bonds put on sale by government-aided companies such as NTPC Ltd, Indian Railways, Housing and Urban Development Corporation Ltd (HUDCO), etc., to generate assured earnings over time. The main advantage of these bonds is that they generate steady secured returns regardless of market conditions.

3. Pick mutual funds to gain high returns

When you secure one half of your money in investments that bring you guaranteed return, you can take a little risk to gain high returns within a medium tenor. So, you can invest a lump sum amount from your PF maturity amount for a fixed tenor in mutual funds to gain high returns directly from the market. Since your mutual fund investments are moderated by fund managers and fund houses, who expertly handle your money and invest it over a range of market securities, shares, and government bonds, you will be able to access higher growth.

So, even if your money is tuned to face the market directly, you can be assured that the gain will be moderated owing to market actualisations. This means that the gain on your investment is calculated through market uptrends and downtrends, which gets balanced the longer you stay invested. So, choose a longer tenor and invest a substantial amount to gain a high interest of 10-12% on your invested sum.

Keeping these investment options in mind, you can easily make your PF maturity amount work harder to generate a lucrative income post retirement.

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