Voluntary Provident Fund (vpf) Vs Debt Mutual Fund

By Author: Quantum Mutual Fund
Total Articles: 49
Comment this article

What is a Voluntary Provident Fund?
VPF is an employee savings scheme that comes under the traditional provident fund savings scheme. However, under the VPF scheme, the contributor can decide the fixed amount for a monthly contribution. This contribution is not part of the 12% contribution by an employee towards his EPF.
Advantages
• Safe option to invest: Since the Indian Government operates the scheme, the risk involved is relatively less as compared to other various schemes of investing; also it is easier and safer to invest via a VPF account.
• High rate of interest: Under the VPF scheme, the VPF interest rate is usually around 8.50% p.a. for FY 21-22.
• Easy to open account: It is simple and easy to open a VPF account. Employees can open a VPF account once by submitting the registration form. The current EPF account shall also act as the VPF account.
• Simple transfer process: If employees change their jobs, the process of transferring from the old company account to a new one is also quite simple.
Conclusion:
The VPF account is considered one of the best options ...
... to invest for a salaried person. Employees are eligible for tax benefits of up to Rs.1.5 lakh under Section 80C of the income Tax Act, 1961. The interest that is generated from these contributions is also generally exempt from tax. However, in case of VPF interest earned on employee contribution above Rs.2.5lakh p.a over Rs.1.75 Lakh basic salary., will be taxable. Investments towards a VPF account are viable because of its efficient rate of interest and tax benefits.
What is the meaning of a Debt Mutual Fund?
A debt mutual fund is a mutual fund scheme that invests in fixed income instruments, such as Government or Corporate Bonds, corporate debt securities, and money market instruments etc. Debt funds are also referred to as Fixed Income Funds or Bond Fund.
What are the four Advantages of a Debt Mutual Fund?
1. High liquidity: Debt mutual fund schemes, especially liquid funds, typically have a high degree of liquidity and investors may redeem their investments faster than others.
2. Tax efficiency: Debt Mutual fund schemes do have long and short-term capital gains tax. However, the benefit of indexation increases after three years of holding and succeeding years.
3. Flexibility: Using an STP, the debt mutual fund units can be easily transferred periodically to an equity scheme or any other scheme as per investor’s choice.
4. Diversification of investment: While choosing debt mutual funds, ensure to verify the portfolio. Generally, it is safer to invest in Debt Mutual Fund that invest Government securities and Government-issued papers, thereby reducing portfolio risk.
Conclusion
Firstly, Debt Mutual fund schemes help reduces overall portfolio risk as they help in diversification. When equity markets fall, debt investments cushion downside risks and may bring stability to returns.
Secondly, Debt Mutual funds are a good option for your short-term investment planning. The accumulated cash could be used for short-term goals like vacations, buying a gift, etc.
Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Quantum Mutual Fund has over 14 years of experience into mutual funds and puts the needs of investors like you first. Invest in different types of schemes & start an SIP with Quantum Mutual Funds today! Quantum Mutual Fund believes in sustainable growth built with integrity & transparency and are trusted by over 50,000 active investors to achieve their wealth creation goals. Our aim is to generate sensible, risk returns for your investment horizon. Quantum Mutual Fund - Start an SIP in different asset class funds