Provident fund or personal loans
For the last few days, I have been breaking my head on something. I have a need in real life to make some expenses next month. In order to do that I was wondering if it would be a good idea to withdraw my provident fund or manage it with a personal loan. I was asking for opinions from many people and I have finally decided what I have to be doing. I'm going to be sharing my experiences on this topic in this article.
Having an emergency fund
It is always very important to have emergency funds and it should be easily accessible too. Having the thought of saving an emergency fund is good but if it is locked somewhere as an investment, there is no point in calling it an emergency fund. Some people might think that when there is an emergency they can arrange funds from others or through other sources and then work on getting their locked funds back. But it may not work out well in all situations.
Having an emergency fund is very good for taking care of emergency needs. There can be a family emergency both for good as well as bad things but we shouldn't be without any liquid funds in hand. That's the most important thing that everyone should consider to have.
Withdrawing provident funds
The government of India provides an opportunity for the employees to save some part of their salary to Provident funds. There is also a scheme where we can push more percentage of our earnings to the provident funds. This is mostly the retirement settlement that most people consider it to be and make their living after retirement with the interest gained from this investment. Some people also have the strategy of not saving anything in PF and withdrawing them whenever needed. I wouldn't say either of these is bad but both works based on someone's need and perspective.
I was deciding whether to withdraw my provident funds. I don't have much yet there but in the coming years, it should increase in a nice way. I tried withdrawing two times but both times I had entered the reason as a not-so-common one with lots of restrictions. The request got rejected both times and people usually request a withdrawal saying that they are withdrawing the amount for sickness and the money is credited as fast as it can. I did not want to tell any lies and wanted to see if I could give a proper reason and get it. After the two failed attempts, I wanted to discuss this with someone and maybe give it some more thought.
Personal loan
I have mostly decided to take a personal loan instead of taking the amount from Provident funds. Someone suggested that it is the best approach to take a personal loan instead of going for the PF amount. The main reason is that we will not be able to push the funds back inside Provident funds if our need is over or if we arrange the funds elsewhere. The interest rates that PF offers are also pretty decent and that's another reason.
I was suggested to take a personal loan because it is better to pay the EMI for the same than spending all the money reserves we have. If we are able to pay the EMI, it should go away in no matter but what if I don't have enough money when I retire? Considering all these points I decided to take a personal loan instead of using my PF and even in the future I have to make sure I'm not using my PF amount. Maybe in the worst case if I'm fully stuck with debt and I have no other way to arrange funds, then PF can be a good choice.
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