Investment options for self employed – No PF savings
Owning to their irregular income of most self-employed workers, they need to find other investment alternatives, in view of their future. Below are some alternatives they can invest.
Investment options for self employed
Employee provident fund, EPF, is a fund specifically created to offer more financial security, providing a strong financial stability for the future. Individuals (especially employees) are required to save up a portion of their salaries which can then be used in the future (after retirement). Depending on choice, an employee may choose to save at any time but in most cases, monthly savings are done. Mandatory, employees, of organizations registered with the EPF, pay up to 12 percent of their allowances towards the program.
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At the same time, the employer also contributes the same amount. Unemployed or self-employed workers do not have access to this program therefore they are on their own to secure their future (retirement).
5 investments for self employed
Owning to their irregular income of most self-employed workers, they need to find other investment alternatives, in view of their future. Below are some alternatives they can invest in:
- Fixed-deposits bank scheme: It is popular plan offered by banks whereby an individual will be required to save up some of their income for a period of time. It is a very good short term investment option. It is very secure,with a guaranteed interest income. Booked interest rates remain constant regardless of any changes in card rate during the saving period. However,withdrawal can only be made after the agreed period of time. In case of urgent need to perform a withdrawal, a premature withdrawal penalty is deducted from the savings.
- Debt mutual funds: It is a fixed income alternative. It focuses primarily on investing in fixed income securities such as deposit certificates, corporate and government bonds, treasury bills, commercial papers and more. Returns are higher than the fixed deposit option. Fortunately, premature withdrawal penalty does not apply in this option, although, some debit funds may deduct one percent from the withdrawal amount as an exit load.
- Public provident funds (PPF): Another good popular alternative to EPF. The government controls this option and investment amount and returns in care of the government. However, the ministry of finance reviews its interest rate every quarter of the year, depending on the yields of the bonds sold by the government. Unfortunately, PPF is faced by its rigidity i.e. lack of liquidity.
- Equity mutual funds: This is one of the best performing options for the past 7 years. It is handled by highly qualified professionals, following up with market activities and also seeking investment prospects. It is less risky for stock investors. Equity funds can be sub-divided into multi cap funds, small cap funds, dividend yield funds, large and mid-cap funds etc.
- Pension Schemes: This is a good alternative to EPF. It targets the after investment life of the citizens. The individuals are expected to pay up some percentage of their income till their retirement. The saved income is used for investment. The funds are eventually made available until after the individual’s retirement. It is paid in installments after retirement. An individual will be required to register with a pension firm to enjoy the option.