EPF investing in equity markets

Yesterday the decision was taken by the employee Provident fund to invest the money that they get into the equity markets albeit starting off with 1% and upto 5%.

This is the start of some good news.  Till today the EPF was highly conservative and only investing in the highest quality of debt.  This can be a very strong and consistent flows into the equity markets for India.

The increase in the equity allocation will not really make a difference to the money that the epf funds generate for people who have been in jobs for a long time but will definitely make a nice difference to people who are just coming into the job scene.

Let's say that the 1% equity earns at the rate of 15% per annum.  This will translate into a 6% benefit over the regular returns of 9%.
So over the entire portfolio this will translate into a 0.06% per annum benefit which for someone who has 10 to 15 years left in their jobs there will be an insignificant impact.

The point of this is that there was money lying and the government is trying to put this into good use.  This will be a significant amount of money which will keep coming into the investment pool for the country.

It's a good start..  It's simplefinancialsense