I have investments in NPS, PPF, MF and FD. What is the best option to withdraw Rs 5 lakh for constructing my sister’s home?

I have investments in NPS, PPF, MF and FD. What is the best option to withdraw Rs 5 lakh for constructing my sister’s home? 

Strap: The sensible choice would be to liquidate your MF investments or break your bank FDs 

Navneet Dubey 

My sister has asked me for some financial help, and I have decided to give her Rs 5 lakh towards the construction of her house. Currently, I have the following investments: Rs 12 lakh in NPS, Rs 9 lakh in PPF, Rs 12 lakh in EPF, Rs 21 lakh in MF portfolio through SIPS and Rs 10 lakh as bank FD. Please help me determine where I shall withdraw this amount of Rs 5 lakh with the most minor penalty and loss to me. 

Arindam Banerjee 

Reply by Rajiv Bajaj, Chairman and MD, BajajCapital 

We truly appreciate your generous intent to support your sister in her time of need. It’s a selfless act that reflects your strong sense of familial responsibility and care. However, it’s crucial to approach this situation with a well-thought-out financial strategy to ensure your sister’s and your long-term security. 

As you contemplate breaking your current investments, let’s delve into the specific accounts involved—the Public Provident Fund (PPF), Employee Provident Fund (EPF), and the National Pension System (NPS). These financial instruments are carefully designed for retirement planning, providing a secure nest egg for your future. Prematurely withdrawing any sum from these long-term investments can significantly impact your financial stability during retirement. We recommend exploring alternative means to assist your sister without jeopardising your financial security. 

The sensible choice is liquidating your MF investments or breaking your bank FDs. However, consider your mutual fund portfolio, which you’ve diligently built through Systematic Investment Plans (SIPs). Ideally, this portfolio should be tethered to your long-term personal goals, such as your children’s education or impending marriages. Halting the SIPs or withdrawing funds from this portfolio may impede your progress towards these life goals. We recommend preserving the continuity of these investments to maintain your financial aspirations. 

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In your case, one prudent course of action to explore is to consider breaking a bank Fixed Deposit (FD) and paying the associated penalty as a source of immediate financial support for your sister. This method allows you to meet her needs while safeguarding your long-term investments. Your fresh savings can then be channelled towards replenishing the withdrawn amount as expeditiously as possible. 

This approach helps balance supporting your sister and preserving your own financial security. It empowers you to fulfil your noble intentions while maintaining the integrity of your long-term financial plans, ensuring a secure future for you and your family. 

We understand the importance of family support, and your desire to assist your sister is admirable. By implementing a prudent financial strategy, you can ensure that this support does not come at the expense of your long-term financial well-being. 

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)