I have heard that EPF transfer & withdrawal process has become a bit faster. But, it varies from individual to individual. If you have linked UAN then its easy. But, what about an earlier EPF account with an old employer?
I left a company few years back. I had my EPF account long back then. At that time this online system wasn't there. I couldn't withdraw from that EPF account. I thought I was earning interest on it, so let it be. But, now I am working in a new company and they have opened my EPF account plus I have been alloted UAN also. That's ok.
But, how can I transfer my earlier EPF amount. Do I need to visit my old employer which is in a different city? Can it be transferred online? Please guide me how to do it.
@balogh03 Yes, the earlier one starts financial planning, the more amount we can accumulate. DIY approach is fine but getting professional help is also a good idea especially if you are a new investor. People are realising the importance of financial planning these days. It's great you consulted a financial expert. How was your experience and what guidance you got? A brief idea, if you can give.
@prateek Rightly said! But, to some extent. Insurance should never be mixed with investment. However, one must not ignore the importance of health and term insurance as well. Both, insurance & investment have their own special place in our financial life and none can be ignored.
The motive to have insurance should be to safeguard you and your family by taking an adequate risk cover. Whereas your investment strategies must be focused on generating good returns & growing your money in the long run. What do you think? Did I point out correctly? Any add-ons you wish to make to it.
Let's have a look at: What is SIP or Systematic Investment Plan?
A systematic investment plan (SIP) is a small and easy plan offered to interested mutual fund investors. SIP scheme is very much similar to recurring deposit scheme wherein an investor invests small amount of money on regular basis. The underlying instrument in SIP is mutual fund though unlike RD.
The SIP scheme helps an individual investor to invest in the Mutual Fund schemes in instalments instead of a lump sum of amount.
Examples of few popular investment schemes:
How SIP works?
Step 1: Open an SIP
Many popular fund houses and mutual fund distributors provide SIP scheme plan for attracting interested investors.
Note: Experts believe that its always better to start with systematic investment plan wherein one can increase the amount of investment over the period of time.
For Opening SIP account, the below details to be submitted:
One must provide KYC (Know Your Customer) details viz., copy of identity proof, copy of address proof and a photograph
Step 2: Planning Investment
Once the SIP account is up and running, the investor must decide and plan for:
Amount to be invested
Period for which the amount to be invested
SIP is a flexible investment method which encourages an individual to save and build a financial back-up for future.
SIP Investment technique:
An investor will receive number of units of mutual funds based on the amount invested by the investor and mutual fund NAV at that given period of time.
The investor opting for this plan must have a close watch on ongoing market condition to ensure to make proper investment.
Every time you invest money into SIP scheme, additional units of the scheme are purchased at the market rate and added to your account.
SIP returns mechanism:
The investors benefit under SIP scheme from:
The Power of Compounding.
Below we will discuss and understand the above two mentioned concepts to understand how SIP works and earns return.
1. Rupee–Cost Averaging:
Markets are very volatile and are changing every time which makes it very confusing for all the investors to decide when is the right time to make an investment.
Rupee-cost averaging simply means spreading the cost and rupee value over a period of time instead of one point. The rupee-cost average method allows an investor to spread the market glitches over the period of investment and avoid one time market shock.
Under SIP scheme an investor makes regular investment which enables the investor to receive more units when the price is low and lower number of units when the price is high.
Thus, the investor gets the best balanced portfolio and the market ups and down risk is mitigated and impacts are minimised.
2. The Power of compounding:
Compound interest merely means interest on interest.
Under SIP scheme, the investor keeps investing additional money, also the investor earns interest on amount invested and then the investor earns interest on the complete amount (amount invested + Interest earned on investment) which increases his returns.
Thus by power of compounding an investor earns more and hence the earning power is accelerated for the investor.
Withdrawal from SIP
There are no lock-in periods for major of the SIP scheme (except if someone opts for Income TAX saving SIP scheme viz., ELSS). The investor based on his target or requirement can stop investing under the SIP scheme or withdraw all accumulated value under the scheme. This provides SIP advanced liquidity feature.
The highly liquid and flexible SIP which provides an attractive opportunity for many interested investors.
SIP or Systematic Investment Plan: A Final Take
SIP system completely works on rupee-cost averaging policy which helps to mitigate losses and minimise the risk of market exposure. We can't say risk can be eliminated with this method, it can just be reduced to some extent.
The returns are based on power of compounding with effective rate of return.
SIP is also very liquid investment scheme wherein the investor can withdraw anytime the investor wishes.
Also, the SIP account can easily be opened and closed.
This makes SIP system of investment a balanced approach to planned saving. This may seem to be a feasible option for ones who wish to contribute small but regular amount towards their investment planning. But, remember that mutual funds are subject to market risks and you have to be cautious while putting your hard earned money.
@sdadwal Hi, Can you refer some best saving schemes for girl child in India. I am looking for a good investment plan for my daughter. Are there any Government schemes for girls to support in their education and growth? I have heard about Sukanya Samridhi Scheme. But, is it worth investing in such schemes? Please give your suggestion.
@harleen Hey, that's a pretty good list to share. I like ET markets app and have been using it for some time now. Heard about Kite mobile app also. But, I am not sure how it performs. Can anyone give a slight idea about Zerodha KIte app? Any feedback on the same.
Hey, investing in house requires a big lump sum amount. A salaried person having a small basic salary can't afford it. We have to rely on home loans for that. Then we have to pay EMIs including interest.
So, I don't feel this is the best investment. On personal level, having a house feels good. But, we should go for it once we have extra savings. Don't you think so? Before that, we must keep some money as emergency fund and in other investments.
@harleen I was really confused as to what is demat account. I am not from investing field. I am a newcomer in investing. Many doubts got cleared after reading this. I am not interested in trading since that sounds risky. But, I wish to invest for long term.
@ishu Yes, financial planning is really crucial. The cost of living is so high these days. I wonder how the prices of products and services will sky-rocket in the coming years. So, it's better we plan well for our retirement. There are too many financial advisors, I really get confused which one to choose. Is it worth consulting a financial planner? What if, I want to manage my investments myself, is it possible? or Should I consult for better investment options?
@sdadwal Yes, financial planning is really important for women in India. This part is mostly ignored or delayed. We should start planning for our retirement at young age. Small savings plus investments done today can help accumulate good amount to secure our future. So, ladies out there, you have performed extremely well in various fields. Don't ignore this crucial part of your life called financial planning
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