Skip to main content

Retirement Planning for NRIs

Our society is changing. Nuclear families are the norm. Inflation is high and hence money needed to fund the retirement is increasing. Additionally due to longevity of life, the requirement for retirement fund will further increase. This is where the right retirement planning helps individuals spend their time in old age with dignity.

Most of the Indians living in foreign countries plan to come back to India at some point in time in the future. Hence it is important that they plan for their retirement in India.


Even though many NRIs plan to come back in the later stages of life, their children will not come back. They do not have much idea about the options available in the Indian market which prevents them from planning well for their retirement.

Steps in retirement planning:

Start early: The importance of starting early cannot be emphasized enough. This is the key to a happy and wealthy retired life.

Have a concrete plan: You must have a plan as how much you need post retirement keeping inflation in mind. Once you have a figure, work backward to find out your retirement requirement. This will enable you choose appropriate financial products for your retirement requirement.

Money needed to save for retirement

 

Current Age

35

Monthly Expenses

30,000

Retirement Age

65

Requirement at Retirement

24,000

Q: How much I need to save every month to achieve this?

 

Number of years remaining

30

Need per month post retirement

24,000

Need per year post retirement

2,88,000

Projected Life post retirement (years)

20

Projected Inflation

7%

Rate of interest for discounting post retirement

8%

Value of per year need when you retire (Because of inflation)

21,92,329

The multiple factor for GP

0.9907

SUM of Money needed on the year of retirement

3,83,58,639

You will need a corpus of 3 crore, and 83 lakhs for the purpose of retirement under the above mentioned condition.

Monitor your plan: You should keep monitoring your investment and change as per the demand of the times and your age. For example, you may have decided to invest almost 80% in equity when your age was 25 but the proportion will have to come down when you turn 40.

Important Points

NRIs should consider the time horizon available to accumulate money for retirement.

Secondly, plan for the emergency and health insurance. In fact, health insurance should be an integral part of the retirement planning.

If you have any goal to meet, factor those expenses too. For example, if you plan to visit your children abroad every year, plan for these expenses in your retirement planning.

Finally, never underestimate the power of inflation to eat into your purchasing power. You must decide upon the requirement based on high inflation rate.

What are the options available for retirement planning?

Indian market is well developed and it provides enormous options to plan for retirement as per individual's risk profile. Let's take a look at the financial investment options available for NRIs.

Bank Deposits: The long term bank deposit in India is a risk free option. It also pays a good interest rate of 8% to 9%.

Equity and Mutual Fund: With Indian economy slated to grow at a rate of 8% for the next few decades, Indian stock market offers tremendous opportunity for NRIs to invest and profit from the growing economy. Indian stock market is pretty well regulated and covered by analysts. Though the risk is high, the returns from market have been the highest in the long run.

Real Estate: Real estate is another good investment for retirement because of booming economy.

Insurance: Insurance firms offer variety of products promising security and returns to suit retirement needs of overseas Indians. ICICI, LIC, HDFC, and many other insurance firms have retirement & pension plan which can be availed by NRIs. Most of the insurance companies also offer comprehensive health insurance which must be taken for retirement purposes.

You can buy retirement plan with cover or without cover. You can also have unit linked retirement plan which will give high returns but also presents high risk. ULIP, after the changes made by IRDA, has become more attractive and can provide much better returns than typical insurance products.

Things to look at in any plan

Look at the typical returns provided by the retirement plan. You should also look at the returns provided by the plan in last 5-10 years, compare the plans and select accordingly.

Be sure about the repatriation clauses in the plan. It will set the right expectation.

Lastly, your retirement plan is for your retirement purpose. Avoid the temptation of withdrawing from it to meet other needs.

 

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

4) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

5) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

6) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

7) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

8) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

Popular posts from this blog

NPS for Tax Saving

The NPS is a great way to save tax if you don't mind locking in your money till you retire. Till last year, the taxability of the NPS was a big issue. But last year's Budget changed the rules and made 40% of the corpus tax free. The PFRDA wants that the balance 60% to be exempt from tax as well. The emphasis is on increasing pension coverage. So, allowing EEE status (to NPS ) is our major demand (in the Budget NPS is especially useful for investors who may have exhausted the `1.5 lakh investment limit under Section 80C but want to save more.   Another way the NPS can cut tax is by rejigging the salary.If a company deposits up to 10% of the basic salary of an employee in the NPS under Section 80CCD(2d), the amount will be tax free. Turn to page 28 to see how much tax this can save. However, the take-home pay of the employee will come down. Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 10 Tax...

Retirement planning from a long-term perspective

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds     `HOW green was my valley'. This title comes from a movie I had watched many years ago. A little boy's journey into adulthood and the story of a Welsh valley's turn of-the-century descent from pristine paradise to despoiled coal mining.   I thought of the title because it is comparatively reflective of a person's life ­ the glorious years when he is earning and the sun down years when he is not having his regular job and, hence, his living standards comes down. The reason is a combination of things. Inflation of food items, transport, increase in health related costs in the later years of life and increase in expenses in almost all basic amenities of life. In India, the social security system is almost non-existent. In some states, wherever it is available, the scales of benefits are extremely modest...

BHIM App

What is BHIM? BHIM stands for Bharat Interface for Money , which is an easy way of transferring money from one bank account to an other via a smartphone using the Unified Payments Interface (UPI) platform . It is an instant payments application meant for sending money as well as requesting for payments. How is it different from UPI? BHIM is no different than UPI. But in the case of BHIM, customers don't have to download mobile applications of multiple banks, instead a single BHIM app downloaded from Android Play Store is sufficient. Other than that, payments can be made through a virtual payments ID or through account number and IFS code, same as UPI. What you need to use BHIM? BHIM can be used across an droid smartphones with version 4.0 and above, also it will be made available on iPhones and Windows smartphones very soon. Further, for feature phone users they need to use the USSD feature by dial ing *99#. Why was the need for BHIM felt when UPI is already in place? With various...

SBI Long Term Advantage Fund Series

Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 10 Tax Saver Mutual Funds for 2017 - 2018 Best 10 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. ICICI Prudential Long Term Equity Fund 5. Birla Sun Life Tax Relief 96 6. Franklin India TaxShield  7. Reliance Tax Saver (ELSS) Fund 8. BNP Paribas Long Term Equity Fund 9. Axis Tax Saver Fund 10. Birla Sun Life Tax Plan Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave your comment with mail ID and we will answer them OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com OR Call us on 94 8300 8300  

ELSS Funds are Best Tax Saving Option

Equity-linked saving schemes (ELSS) are the best way to save tax in 2017 . The Economic Times assessed 10 tax-saving options on eight key parameters, including returns, safety , liquidity , costs, transparency , flexibility , ease of investment and taxability of income. ELSS funds scored highest, followed by the National Pension System (NPS) and Ulips at the second and third place, respectively . The terrific returns generated by ELSS (CAGR of 18.7% in past three years and 17.46% in past five years) are not the only plus point of these funds. Their costs are very low (2.52.75% a year) and all charges, portfolios and transactions are in the public domain. Returns are tax free because long-term capital gains from equity funds are exempt and they have the shortest lock-in period of three years. Investing in ELSS funds has now become very easy with the launch of the e-KYC facility . The whole process does not take more than 30-35 minutes. The Pension Fund Regulatory and Development Aut...
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