If you're going to switch to the new tax regime, does it make sense to stop putting money in PPF, NPS, etc to simplify things?

[eluid]

I know the conventional wisdom is that you should keep using these retirement planning instruments, but at this point my retirement savings are spread over EPF, PPF, NPS, ULIP, and MFs. I'm pretty sure there is almost no benefit to spreading things out like this if you're going to be on the new tax regime for the rest of your life. It makes things too complicated for me, I realised this after I almost forgot I even had this shitty ULIP.

So I've been thinking of stopping my PPF and NPS contributions. The ULIP my dad made me do it but it's gained only 10% over the last year which is quite pathetic.

So I'll be left with EPF, MFs only. Does that make sense?

 

[resjudicata]

@eluid Ppf is one of the best investment irrespective of whether you are getting 80C deduction or not.

Interest earned and amount received on maturity both is exempt.

It has lock in 15 years which can give you a self discipline in investing

Compounding effects are great if you invest 1.5 lac evey year in long run

 

[atgeki]

@resjudicata This. Well put.

 

[resjudicata]

@atgeki Thanks.

 

[consolatio]

@resjudicata Isn't putting that same 1.5L in an ELSS a better plan for the long term future? Genuine question coz I'm in the same boat and have wondered about this.

 

[wynne]

@consolatio It helps to make the debt portion of investment auto pilot without any effort.

 

[resjudicata]

@consolatio ELSS is more risky then ppf as it is based on market where as ppf is backed by govt.

elss has no fixed return where as ppf has fixed income

profit on sale of elss upto 1 lac is expemt above 100000 it has tax of 10% where as ppf is fully expent on all aspects.

not confirmed but i think in case of you going bankrupt govt cant liquidate your ppf but they can liquidate elss

 

[planter]

@consolatio I thought ELSS returns are taxable. It isnt like PPF which is Exempt Exempt Exempt.

 

[consolatio]

@planter You are correct about that

 

[kiwigirl007]

@consolatio Apart from Equity investment you need to invest some part of your money in non-linked market schemes which will exempt you from tax as well. At this point of time PF is the only one which is Exempt Exempt Exempt as such taking that up is fine. ELSS is also exempted but it doesn't have a lockin period so for indisciplined folks VPF is a good option.

 

[eluid]

@resjudicata Good point, had not considered that. Thanks.

 

[samr1977]

@resjudicata Hey I had a doubt regarding the PPF. I've created one with my bank. I can see how much money I've put in when i check the transactions. My doubt was is the interest generated, added to my account after every quarter? Because I haven't seen the intrest amount being added. Is it calculated after the lock in period?

 

[dudeboy]

@samr1977 The interest is credited at the end of every financial year.

 

[resjudicata]

@samr1977 Interest is credited on 31/3 evey year.

 

[seeking_new_church]

@resjudicata PPF interest is less (7.1%) compared to EPF(8.255), why?

 

[mydonspace]

@resjudicata What about arbitrage fund ?

 

[planter]

@mydonspace arbitrage fund is much lower returns and will attract 10% LTGC

 

[newbee1]

@resjudicata This. Also after first 15 years, you can renew for another 5 years.

 

[resjudicata]

@newbee1 You can renew any number of times in the lot of 5 years also you can just stop contributing after 15 years and still get interest on balance amount.

 

[newbee1]

@resjudicata That I am not sure, banks will ask you to withdraw ain't it?