Investment School: Hidden savings of an employee

Hidden savings of an employee

Writing a post after a loooong time.

Most of us often feel bad that we are not saving enough from our net take home salary. Yes, one should feel bad about it and need not be bogged down because of this for a simple reason - you can find opportunities to save always if you are little bit more disciplined.

But what is this hidden savings which i am talking about. Every employee in the organized sector saves 24% of the basic salary as Employee provident fund and EPF earns 8.5% annually. Following are the most likely hidden savings for an employee in organized sector.

1. Employee Provident Fund + Employee Pension Scheme = 24% of basic salary.
2. Super Annuation = 10-15% of basic salary ( varies between companies).
3. Gratuity = 4-5% of basic salary ( varies between companies)

All the above components can be redeemed when an employee quits an organization and moves to another one.

For a take home salary of 50k, one would save around 7-8k without knowingly and this is earning 8.5-9.5% interest which is not bad.

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