Provident Fund

Provident Fund is a blessing in disguise for people who struggle to save . It is a ideal case of  "Automated Investing" or what you say investing on "Auto Pilot" .

But the Provident Fund is not without its share of problems. Since it is to a great extend at the mercy of the government , it remains extremely non transparent .

My experience has been that it has nearly been four years since i got my Annual Statement from the PF office , this makes a subscriber like me, extremely uncomfortable . And when we finally get a statement I struggle to make sure that the amounts shown on the statements are correct

Now here is a solution , This is only for subscribers with PF accounts in Bangalore. The PF number in Karnataka has this format KN/Establishment Code/Employee No.

Find your PF amount

Use the link above and enter the details , you may most probably see the amount in your PF account.

I only wish PF

• Someday have a small exposure to equity, may be a Index Fund  
• Someday be like a online bank account into which i can login and check anytime
• Someday have a unique number which would not change with my employer.

Would this "Someday" ever come or will this just remain my wishfull Someday

Image: i owe credit to the photographer

Employer's Contribution to PF

For a salaried employee , when ever we take a look at our Salary Slips we always see a Employee Provident Fund (PF) deduction of  12% of our Basic Pay in it and we also know that our employer would need to match that with a equal contribution

But if we see our annual PF statement and try to calculate the amount in our EPF account , it never adds up and it seems like something is missing ... well this is the missing bit

Of the 12 % that our employer is suppose to credit to our EPF( PF) account only 3.67% of  Basic Pay goes into EPF and rest that is 8.33% of Basic Pay goes into Employee Pension Scheme (EPS)

Image : FreeDigitalPhotos.net,Photographer: renjith krishnan

Saving on Auto Pilot

Have been reading on Ramit Sethi's blog where he stresses on setting your Savings/Investments in a Auto Pilot mode and i started wondering how can we in India do that ..

1) Increase PF Contribution : For those of you who are employed and for whom your employer provides you with a Provident Fund , first figure out if you can increase the contibution from the current 12% to say any percentage more ( Maximum would be 25% ) . your employer will not match you , but just that you have started to contribute more money that would be compounding at 8.5% interest .

2) Mutual Fund SIP: Start a SIP of any 5 start rated Mutual fund( http://www.valueresearchonline.com/toprated.asp) , choose first of the month as date of SIP

3) Open a Recurring Deposit: You can open a recurring deposit , try to keep desposit date in the first week of the month . Now you even have a Recurring deposit , whose interest is variable .

4) Use a Online trading account: Some of the trading accounts ( Sharekhan.com does) allows you to set a SIP for stock(s) .That is to buy a certain script on a specific day of the month .May be for a start, try to buy NIFTY BEES (benchmarkfunds.com/static/Nifty/overview.cgi)

The Intent in all these is not only to automate , but also to make you "Pay Yourself First".

If you can think of any other ways of doing this , Please do comment .