VOLUNTARY SIP – AN EFFICIENT ALTERNATIVE

• • Starting a Voluntary Systematic Investment Plan (SIP) in a suitable mutual fund scheme can be an alternative.

• • Along with providing tax efficient returns, a Voluntary SIP can help you build wealth over the long term.

• • Depending upon the investment horizon and risk appetite, a suitable fund can be chosen for starting the SIP.

Post Tax Returns of Voluntary Provident Fund vis-a-vis Voluntary SIP in Mutual Funds

Illustration below depicts how a monthly investment of Rs. 25,000 in various investment products would have grown in 5 years’ time. We would like to highlight that we have used active mutual fund schemes benchmarks for calculation of returns in the below chart. Generally, active mutual fund schemes aim to outperform their respective benchmark.

The above table is for illustration purpose only. Data as on 31st March 2021. Investment is done on the 1st of every month.
VPF Interest data source: https://www.epfindia.gov.in/ As VPF investment is compounded annually hence CAGR is slightly lower than actual VPF interest rate.
Benchmark data source: MFIE.
Applicable cess and surcharges extra.
Assuming the highest tax bracket @30% plus applicable cess and surcharge.
Reference of VPF has been given for the purpose of the general information only. CAGR has been considered with monthly compounding consistent with SIP investing. PF investments are compounded annually which may result in a slightly lower CAGR.
Investment in Mutual Funds Schemes carry high risk. The Tax calculation shown above is for illustration purpose and general information only. Amount(s) mentioned above may undergo a change if assumptions specified herein do not hold good. Investors are advised to read the scheme information document of the scheme carefully before investing and consult their Tax Consultant or Financial Advisor to determine tax benefits applicable to them.