If you're looking for smart ways to grow your money without worrying about taxes eating into your returns, EEE (Exempt-Exempt-Exempt) investments can be a great option. This is a triple tax benefit, where your money is tax-free at the time of investment, during its growth, and even at maturity.
Your investment gets tax benefits at three stages. When you invest, you may get a tax deduction that reduces your taxable income. Then, during the investment period, the returns or interest you earn are not taxed yearly and at maturity, the amount you withdraw is completely tax-free.
Five EEE investments that let you save and grow money
Employee Provident Fund (EPF)
The EPF is a retirement savings scheme for salaried employees, managed by the government through the EPFO (Employees' Provident Fund Organisation). In this scheme, both you and your employer contribute a part of your salary every month and over time, this money builds into a large retirement fund.
Under EPF, your contribution (up to Rs 1.5 lakh a year) can help you save tax under Section 80C in the old tax regime. Your employer also contributes to your EPF (up to 12% of your salary), and this amount is tax-free in both the old and new tax regimes. Currently, you earn an interest of around 8.25% per year.
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Voluntary Provident Fund (VPF)
It is an additional savings option linked to EPF, where salaried employees can choose to invest more money from their salary into their retirement fund. It is completely voluntary and safe because it is backed by the government and earns the same interest as EPF, which is usually higher than most fixed deposits.
VPF also gives tax benefits but for that your total contribution in a year has to be less than Rs 2.5 lakh. VPF money is also locked in like EPF for five years as it is meant for long-term retirement savings.
Public Provident Fund (PPF)
It is a safe savings scheme backed by the government that helps you save money for the long term while earning tax-free returns. You can invest a minimum of Rs 500 and up to Rs 1.5 lakh in a year. The money you invest, the interest you earn, and the final amount you get on maturity are all completely tax-free.
The lock-in period is 15 years, meaning you cannot fully withdraw the money before that. Currently, PPF offers around 7.1% interest per year.
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National Pension Scheme (NPS)
The NPS is a government-backed retirement scheme where anyone between 18 to 70 years (except armed forces employees) can invest money. It works like a long-term savings plan where your money is invested in markets like stocks and bonds, so returns are not fixed but can be higher, usually around 9% to 12% depending on risk.
Tier 1 is the main retirement account in NPS where you must invest regularly, and the money is locked for the long term with limited withdrawals. You can also get tax benefits of up to Rs 2 lakh per year under Section 80CCD.
On the other hand, Tier 2 is a flexible optional account and requires a minimum deposit of Rs 250 but you can only open it if you already have Tier 1. At retirement, you can withdraw a part of your corpus as a lump sum, and the remaining amount must be used to buy an annuity, which provides regular pension income.
Sukanya Samriddhi Yojana (SSY)
It is a government savings scheme specially made to help parents save money for their girl child's future, like education or marriage. It offers a high, fixed interest rate of around 8.2% currently, and comes with EEE tax benefit. You can open this account only for a girl child below 10 years of age, and each family can have accounts for up to two daughters.
The money stays locked for a long period and fully matures after 21 years from the date of opening the account. However, if the girl gets married after turning 18, the account can be closed early.
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