After EPFO's Rate Cut To 8.55%: Here's What You Should Do?

Why the rate cut?

The retirement fund body has given lower returns from its debt assets to be the prime reason for its recent rate cut which otherwise had been doing well in the current regime of high inflation cost.

Still the most attractive debt instrument

Nonetheless, given the purpose with which the EPF account came into existence, it still manages to provide returns enough to beat inflationary concerns. As other fixed investment instruments still fetch lower returns of just anywhere between 7%. Plus the govt backing for the product retains the attractiveness of the product even after 10 basis point reduction has been made on the interest rate for the financial year 2017-18.

 

Salaried employees can add to their retirement kitty with NPS

As the retirement corpus through EPS fund is unlikely to meet the retirement expenses and goals, individuals can consider investment in NPS if their pocket does allows. However, it should be remembered that it is also an illiquid investment which provides market linked returns.  And hence a chance to offer higher returns. All moves are being taken by the govt to enhance the market attractiveness of NPS.

Other mutual funds, ETFs, ELSS etc can also be taken:

 
In the initial year's of one's career one can dig in even riskier instruments to gain the advantage of capital appreciation and as one moves into his or her sunset years, the funds from these asset class can then be transferred to safer asset classes such as fixed return bearing debt instruments.