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

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...

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...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Mirae Asset Emerging Bluechip Fund

Start Saving for Tax 2018 by Investing in ELSS Funds Online HOW HAS THE Mirae Asset Emerging Bluechip Fund PERFORMED?   With a 7-year return of 25.08%, the fund has outperformed both the category average return (18.04%) and benchmark (13.4%) by a wide margin.   Growth of Rs 10,000 vis-a-vis category and benchmark   Mirae Asset Emerging Bluechip Fund   is a mid-cap oriented fund continues its stellar run, clocking another year of outperformance over benchmark and peers—a feat it has achieved every year since inception. The fund manager plies a strictly bottom-up approach to stock selection and keeps risk contained by focusing on larger mid-caps. A year ago, it had stopped accepting lump sum investments and now the fund has also put restrictions on SIP investments—only allowing SIP on the tenth of every month with an upper limit of Rs 25,000.   It has done so to preserve its return profile in the face of mounting inflows and stretched valuations in the mid-cap space. This step should hel...
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