Skip to main content

Start planning early for a tension-free retirement

 

If you are young, deploy most of investible income in equity instruments

RETIREMENT is not only about taking long walks in the evening, gardening or pursuing your hobbies. Remember that you will be without a job and your children may or may not support you at that time. Therefore, it is very important that you plan for your retirement.
While all of us would like to live a tension-free retirement life, the success of it depends on starting early and investing correctly.

Here is an outline on how to plan for your retirement?


First, decide your retirement age. Then calculate your current monthly expenditure. Now ask yourself if you want to maintain the same lifestyle or are ready to compromise on your current lifestyle during retirement.


This will tell you if you require an equal income or are willing to settle for a lesser income in your retirement days. Adjust the money required with an inflation rate of 4-6 per cent per annum till your retirement life. This will tell you the corpus you need to have to give you the monthly income you require to support you in your retired life. You will need the help of a certified financial planner or can even use the financial calculators available on various financial planning websites to help you do the calculation.

Once you know the corpus you require to provide you with the required income over your retirement period, the next step is to know the investment avenues available to achieve your retirement goal.

Investments should depend on your age, risk profile and the period you have for investments. Balancing the portfolio from time to time is a must. The following are the different investment products you can consider during the investment phase:

Mutual Funds investment through SIP: If you are young and have a long time to reach your retirement age, we suggest you initially deploy most of your investible income in equity instruments and as time proceeds decrease the exposure to them.

Equity investments are the best tools in beating inflation in future. Invest 100 per cent of your corpus in mutual funds through SIP when you are young. Once you reach the age of 50 years, transfer your money from equity investments to debt funds.


PPF and EPF: These are the safest investment instruments and carry a tax free investment rate of 8-8.5 per cent. A PPF account can be opened by any salaried or non-salaried individual in any bank or post offices. You can invest any amount between Rs 500-70,000 to keep a PPF account active.


Remember don't dip into your savings, PPF works best because of its 15 year lock in period. EPF also provides a return of 8.5 per cent and comes with no risk.


New Pension Scheme: This requires a minimum investment of Rs 6,000. It offers two investment options -active choice or auto choice.


In active choice, you can allocate your funds across three fund options equity, fixed income instruments and government securities.


However you can invest a maximum 50 per cent of your portfolio in equities. In auto choice, your funds begin with a maximum equity exposure of 50 per cent.


There are two separate accounts--Tier I is the basic account in which withdrawals are not allowed till the age of 60 years. In Tier II account withdrawals are allowed. You need to have a tier I account to maintain a Tier II account. You can join the NPS by approaching any branch of a bank authorised by the Pension Fund Regulatory & Development Authority as a point of presence.


The list of banks authorised to sell NPS are available on the PFRDA website. NPS has fixed the retirement age at 60 years. Once you are of 60 years, the NPS allows you to withdraw 60 per cent of the accumulated corpus while the remaining 40 per cent is given to you in the form annuities.


Insurance Plans: Not many companies are currently offering Unit Linked Pension plans while the traditional insurance pension plans offer low returns. I would not suggest to look at insurance plans to meet retirement goal as they have poor returns. The best instruments are mutual funds through SIP to maximise returns and minimise risk.

 

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

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in L&T Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Popular posts from this blog

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...
Read more

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...
Read more

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...
Read more

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...
Read more

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Read more
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