Done! I’ve set up my Emergency fund! Fantastic.

You will now be able to afford your life if you get laid off for the next three months at least. I’m guessing if you’re reading this, you’re employed on a salary. Let me ask you this, when was the last time you looked at your payslip? How much tax are you paying? How much is going into your Employee Provident Fund account? What the hell is an Employee Provident Fund account!

I implore you to think about your retirement. ‘Erm. I’m 25. Why would I need to think about my retirement right now? I have all the time in the world.’ Yes. Yes child you do. Which is why you need to take advantage of it! Time is key to compounding.

First, if your employer offers you EPF (Employee Provident Fund), then get the details of your fund! Go to the EPF website, check the member passbook and see how much you have! This is absolutely important, you HAVE to know this. You might have an insane amount sitting there without even knowing you have it. Very important – Add nominee details to your EPF account! If something happens to you, you need to specify who inherits it.

In your payslip, find the amount that you put towards EPF, the employer usually matches this amount. So you’re putting X amount and your employer is putting in the same amount. End of the month you have 2X in your account.

Ok imagine this. Your mom says that if you are able to save a 100 bucks a month, she will match that amount and give it to you. So end of the month you have 200 bucks. So now you’re actually getting a hundo, free! This is the Employee Provident Fund. – you put 12% of your basic salary and this amount is matched by your employer.

That was a lot. I get it. Go get some chai. Take a break, I’ll wait.

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Ok feeling better? Retirement, let’s get into it.

I know I used a 25 year old as an example above, don’t fret if you’re older and if you haven’t begun. It’s better to start than sit and shake in fear and put it off for another day.

How much will you need for your retirement? Yeah this number is going to be huge and daunting. It depends on when you want to retire. The general advice is to multiply your annual spending by 25. So you’re earning Rs 4,00,000/year, then you’ll need Rs 1 Crore to safely retire. We don’t need to know the exact amount, we just need a ball park to get started.

Again let’s break it down into small bite sized pieces. We don’t have to save this behemoth of a number RIGHT NOW. It’s over the period of your life time. You literally have all the time to do this.

There are multiple avenues out there that can help you with this. We can start with the simplest. Open a PPF account. Yes, open a Public Provident Fund account. You can save up to 1.5L every year and this has a fixed interest rate and is tax free. The current interest rate is 7.1% (in 2022). But this will just be a part of the retirement chest that you build for yourself.

Figure out how much you can set aside for your PPF. The minimum has to be at least Rs.500 a year. Again, do not worry if all you can do is the minimum, its a start!

You already have an emergency fund, now you have some amount that is left over every month with no purpose. So what do we do? We take a part of that amount and move it to PPF. If you saved 5000 every month, then move a part of it, say 1000 to the PPF account every month.

Ok how do I figure out how much of my savings goes into the PPF? I would recommend you to think a little strategically here. PPF is a safe option. You want to invest in it so that you have guaranteed returns even if the interest rate is low. If you are able to afford the whole Rs.12,500 a month (adds up to Rs 1.5L a year) then nothing like it. Go for it! But if you don’t, then think about it. You want to be able to afford to a lot of things with the money that you have saved, including investing it in the market. So perhaps, do a 50-50? Write to me if you need help figuring this out.

‘This is torture’. YES. But again, we are looking at this through a really really wide lens.

Talk to your bank, or check your mobile app. Most of the private banks have an option for you to open a PPF account through your mobile app itself! I opened mine through my app.

Set up a calendar reminder to move the amount to your PPF account every 1st of the month.

OR (and if you’re not tired already)

1. Set up an RD for the monthly PPF amount, let it debit from your account automatically every month for the next twelve months. (Do it on April 1st if possible, but don’t worry yourself to death if you can’t).
2. Once the RD matures (hopefully on April 1st of next year), move that amount to the PPF account. This way you get a little bit of interest on the amount you’re putting in, and you only need to do this once a year.
3. Every year you need to setup an RD, and every year you need to move the matured RD amount to the PPF account. ADD this to your calendar!!

Aaaaand you’re done. Get hold of a friend to get through this process if required. Reward yourself after you do this. Go out for a walk or head out for coffee/beer. This was indeed a humongous task.

***Do your own research about PPF – couple of facts – this is NOT your emergency fund! You cannot pull out the money as and when you need it since it’s locked in for the first 7 years after which you can withdraw partially. You can only withdraw the entire amount only at the end of 15 years. You can also continue the PPF account post 15 years, you need to fill out a form called ‘Form H’ and continue to keep the account without adding any more deposits, or continue to deposit money in it by extending it every five years.

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