While a lot of people I interact with earn well, many haven’t been able to save. Most common question I get is how to save and where to invest. Duh!

No worries, I was like you when I first started earning. I first started by taking advice from my parents. Being old school, while very happy to share their advice from their experience, it felt dated!

As soon as I started earning, since I didn’t have an PF from my employer, I started putting in money in PPF. It’s the best choice to start saving for retirement as it has a couple of benefits —

• It has higher interest rate than your normal bank FDs.
• It’s a provident fund that helps you save tax! Every year you can transfer up to INR 1,50,000 either lump-sum or as a monthly deposit. You can transfer the 1.5lacs amount at the start of the bank financial year to avail maximum interest rate. I haven’t been able to do so as a salaried employee.
• You can start a PPF account from your bank or from your nearest post office. I started my PPF account from my bank, these days banks also allow you to create an account directly from their netbanking portal. You can also transfer amount directly from portal.
• You can avail loans on your PPF amount. I haven’t used this option as of yet but have seen people avail loans on PPF amount for down payment of home.

While you start investing in your PPF account, you should also keep in mind for the lock-in period 15 years. That is you can’t withdraw complete amount from your PPF account for a period of 15 years once you start the account. However, these days government allow pre-mature withdrawals from start of seventh financial year for select reasons such as marriage, education, among others.

PPF is a great investment if you don’t immediately need fund for the next few years.

While I haven’t been able to invest the maximum allowed for the last 7 years that I have been earning. Imagine if I had put in 1.5L  for the last year years, I would have a corpus of 10.5L plus the fat interest the account would have offered.

This year I plan to max my PPF account and have been systematically putting in 12.5k a month since April.