Skip to main content

Avenues to plan retirement corpus

Retirement planning need not hinge on a single option. A basket of instruments can do the job


   As you read reports of surging inflation, you begin to wonder if you have enough in your kitty. With many people not used to the habit of retirement planning, the concept is still the last item in the list of things to do. So, if someone gets worried and starts thinking about postretirement life, it is not completely out of place.


   Technically, post-retirement life begins any time after the age of 50 and it is also reflected in the vesting period fixed by many insurance companies. In recent years, however, many individuals have begun to advance this figure by a couple of years due to a number of factors. It could be the dream to start an enterprise or the comfort of a kitty at disposal. While the former may still provide some regular source of income, the latter is technically a zero income period and hence requires greater planning.


   The retirement planning in itself can be divided into a number of components as the general assumption is that an individual has at least a couple of decades to plan for this eventually. While the sum needed for the rest of life is not an easy figure to arrive at, one can take up the process as early as possible. Since income levels too change over a period of time, the allocation can vary for the better over a period of time. Hence, a plan or scheme signed up at the age of 30 need not be the end of all when the investor turns 50.


   One of the good things about retirement planning is that it lets you do the investment over a long period of time. For instance, a parent does not have the luxury of building a corpus for a car purchase beyond 3-5 years and so is the case with planning for a child's future. For instance, a parent cannot think of setting aside a sum for a child's education beyond 20 years. On the contrary, an investor can build a corpus over a period of 30-35 years for his retirement kitty if he thinks about it early.


   There are plenty of options for retirement planning and some may not carry the tag too. For instance, an investment in land or property can take care of retirement needs through their sale. On the other hand, there are also flexible products like stocks, systematic investment plans (SIPs) and pension plans which can come in handy after retirement. The choice of products and allocation has to be according to the comfort of the investor and his financial position. More importantly, one has to keep in mind the flexibility and tax implications of each product as they can have a greater impact over a period of time.


   Among some of the options mentioned, the pension plan has lost flexibility because of restrictions imposed by the regulator, Insurance Regulatory and Development Authority. Now, pension plans come with guaranteed returns. This is a big plus but they have lost flexibility. More importantly, they also carry life cover and hence may not be suitable for all. Earlier, even a 50-year-old could think of a pension plan with a high premium paying term of five years. Now it is not the case as they have a minimum paying period of 10 years and because of life cover, can prove expensive. In a number of products, the premium is directly correlated to the life cover and hence an investor cannot call the shots.


   But the positive aspect of the new pension plan is that it forces the investor to think long-term and is particularly advantageous for young investors. For instance, a 30-year-old gets the advantage of life cover and pension with a single product and because of his age, the mortality rates too aren't high.


   While no single product can do the job of pension planning, a combination of products can definitely do the job. Investors can have a basket of products for their retirement portfolio by opting for equity, debt, pension plan and property among others. More importantly, they have to monitor the performances and shuffle the portfolio at regular intervals.

 

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now