As far as possible we should save more money than what we normally
do. Here is a way to save and make more money. We should save money not for
sake of it. We should save so that we can afford better and planned future.
After retirement, we can then afford to maintain the same standard of living.
Then you won’t have to rely on either on others or some financial moneylender
or a banker in order to finance the normal expenditures. Some after retirement
even go for reverse mortgage of their house in which they are living. You can
do some more enjoyment and visit many new places of interest and can afford to
do more fun than the usual. Not because you want to hoard all your cash, but
because you want to use it for good in future. Think about your own retirement.
Enjoy watching your savings grow knowing that you won’t have to depend on
someone else for your future.
Suppose that there is an individual who has started his career and
his income is such that he needs to save the maximum permissible (say one
hundred thousand rupees annually) in order to save income tax. One of the
avenues for this is to deposit in Public Provident Fund (PPF). In case of PPF,
the present rate of interest is 8.6% (this interest is tax free in the hands of
the individual) and maximum amount one can deposit in this account is one
hundred thousand rupees annually. One benefit is that the depositor will be
saving tax not only on the present income, but also on its proceeds in all the
subsequent 15 years, which is also extendable for any period in a block of 5
years on each time. The account holder can retain the account after maturity
for any period without making any further deposits. The balance in the account
will continue to earn interest at normal rate as admissible on PPF account till
the account is closed.
If the person deposits the entire saving amount in the beginning
of the financial year (say by 5th of April) and continues to do the same every
year till say for thirty-five years, then he will getting tax-free the amount
of Rs 2,14,03,229. Supposing that the individual starts this process at the age
twenty-five, he becomes a multi Crorepati at age sixty years – which is the
retirement age for the Government Servants and many private corporate employees.
This amount is realistic, if the interest rate remains 8.6% throughout. This
may be noted that one is only depositing Rs. 3.5 million in equal parts
annually and is getting more than 21.4 millions after thirty-five years. Thus,
by adopting strict discipline in managing the finance, one can be in the upper
strata even after retirement.
