I am 21 years old and I want to invest for my wedding. My wedding expense is expected to be ₹20 lakh. I am planning to get married by 29 or 30 years. I can invest up to ₹15,000 per month. Please suggest a few schemes and let me know if I’ll need to increase my investments later.
—Tarun Prabhakar
Investing ₹15,000 per month for the next nine years will lead to principal accumulation of ₹16.2 lakh. Assuming an average earnings rate at 10%, your corpus will become ₹26 lakh.
Going forward, if you can increase your savings, you should be doing that as the additional corpus can always be used for some other financial goals. You can start SIPs (systematic investment plans) in mutual funds where you can consider a combination of large-cap (Mirae Asset Large Cap); multi-cap (Kotak Standard Multi Cap); and mid-cap (DSP Mid Cap) funds. You can also consider debt allocation which you can even start in a bank recurring deposit. In case your income is in the higher tax bracket, you can start investing in a short-term mutual fund instead.
My last Provident Fund (PF) contribution was in February 2014. Afterwards, I went abroad for one and a half years and became self-employed. I was born in June 1961. I have not withdrawn from my PF account so far. I have recently turned 58. Please let me know if I can keep the funds in PF and keep getting interest or will I have to withdraw the fund?
—Atul Karajgi
As per the current rules of the Employees’ Provident Fund Organisation (EPFO), you can withdraw the entire PF corpus only after you retire or after your active employment. The intent of the restriction is that PF is meant for long-term retirement planning. The minimum retirement age from the perspective of withdrawal is taken as 55 years. As you have completed 58 years of age, you can withdraw the entire corpus. If during your employment, you had completed five years of continuous service with the employer, your PF would enjoy a tax exemption on your EPF withdrawal. However, this benefit is restricted for the corpus accumulated till your continuous period of service. As there was no contribution post February 2014, the accruals post the said period would not be entitled for tax exemption and would become part of your taxable income as per your marginal rate of tax.
Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com