Both EPF and PPF are savings schemes of the government. EPF is managed by a government entity called EPFO whereas PPF is directly managed by the government. Know in which investment becomes quick Rs 1 crore ..
Have you ever wondered how long it will take to reach Rs 1 crore by investing in Public Provident Fund (PPF) or Employee Provident Fund (EPF). If the contribution is the same in both, then in PPF you will soon reach a corpus of Rs 1 crore whereas in EPF the rate of interest is higher than in PPF. One can invest up to Rs 1.5 lakh every year in PPF. The interest rate on this is currently 7.1 percent, which is the lowest in 40 years. Know how much time it takes to build a corpus of Rs 1 crore through PPF.
1 crore in PPF
The rate of interest in both PPF and EPF is not fixed. Let’s try to calculate based on recent rates. If you invest Rs 1.5 lakh in PPF this year and continue to invest the same amount every year, it will take you about 25 years to build a corpus of Rs 1 crore at an average interest rate of 7.1 per cent. That is, you can become a millionaire by depositing 1.5 lakh rupees annually in PPF for 25 consecutive years.
Case of epf
As far as EPF is concerned, the matter looks a bit different in this. There is no investment limit in this scheme. It depends on your salary. As your basic salary increases, the investment in EPF also increases accordingly. According to reports, employees will get 8.5% interest on EPF for the last financial year. Suppose the monthly basic income of an employee is Rs 50,000. The employee and employer contribution each year to EPF will be Rs 72,000. The contribution of both to the EPF is 12-12 per cent of the basic income.
It will take so many years to reach 1 crore
The contribution made by the employee completely goes to the employee’s provident fund while 8.33 percent of the total contribution made by the company goes to the Employees’ Pension Scheme and 3.67 percent to the Employees’ Provident Fund. In this way the entire Rs 72,000 of the employee will go to EPF. But the company’s contribution will be Rs 22,020 annually. If the interest rate and contribution remain the same throughout the career of the employee, it will take 28 years to build a corpus of Rs 1 crore.
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