Received Your PF Payout? How To Divide It Up For Your Regular Income Is As Follows

 Received Your PF Payout? How To Divide It Up For Your Regular Income Is As Follows

Even while it's a fantastic challenge to have, a large provident fund payout comes with its own set of difficulties. After retirement, it can be difficult to divide the dividend among different uses.

Retirement beneficiaries feel tremendous relief when their provident fund (PF) balance is large, but if the PF balance is not wisely diversified among various investments, it may not achieve its intended goals.

When it comes to dividing up the PF amount and making the greatest use of it, people frequently become confused.

Your PF balance must be divided due to shifting demands. Without a doubt, you require a monthly or quarterly cash flow to cover your routine expenses. You also need a corpus to cover any other financial or medical emergencies. Therefore, you must handle the retirement corpus in a variety of ways.

Here are the steps to take.

RELATED TO MONTHLY RETIRED INCOME

You can pick from a number of government, bank, and financial institution plans to guarantee a monthly or quarterly income flow.

The Pradhan Mantri Vaya Vandana Yojana (PMVVY) and the Post Office Monthly Income Scheme (POMIS) are two examples of government-sponsored programs. Because the government is backing these programs, there is no risk involved and a guarantee of returns.

There is also the Senior Citizens Savings Scheme (SCSS), which pays interest on a quarterly basis. Currently, PMVVY and POMIS have an interest rate of 7.4%, while SCSS has an interest rate of 8.2%.

Additionally, banks provide fixed deposit plans where customers can choose between monthly, quarterly, half-yearly, or annual interest payouts. The FD rates may differ from one bank to another. However, it is advised to conduct research and compare interest rates before making a bank FD investment.

For a low-risk return and the tax benefit offered by the equity asset class, you may additionally make investments a portion of the PF corpus in an arbitrage fund.

A LUMP SUM CORPUS IS INVESTED FOR A FINANCIAL EMERGENCY

The second need is for a one-time payment in the event of a medical emergency or another danger of a comparable nature. You might choose to invest a large sum of money in a safe asset that offers capital protection, a good rate of return, and good liquidity.

High-grade debt funds may be a wise choice for investment in order to accomplish this. High-grade debt funds are safer and offer both protection and capital growth.

You can also choose to put some of the corpus in a balanced fund, which invests in both debt and equities, if you're willing to face a little bit of risk. Due to the inclusion of equity in the mix, the fund is slightly riskier than pure debt funds but also provides the possibility of higher returns.

THE FINAL WORD

Let's imagine you have Rs. 1.5 crore in PF money when you retire. To guarantee a monthly income at an annualised rate of 6–9%, you can invest Rs. 1 crore across several asset classes.

You might receive a consistent monthly income of about Rs 50,000 from this. The remaining 50 lakh rupees might be invested to cover unexpected expenses. Focus on achieving a high real rate of return while allocating your retirement fund among various investment assets. For comprehensive advice, always visit your investment advisor.