Investment: It often happens with people that they are not able to make a better return on their investment. Does this happen with you as well? Let us understand some such methods by following which we can get more return on our investment.
Investment: It often happens with people that they are not able to make a better return on their investment. Does this happen with you as well? Let us understand some such methods by following which we can get more return on our investment.
Why Retirement Planning is Necessary?
Retirement planning is very important to stay worry free after the age of 60. Retirement planning is a must for medical expenses at this stage of age, to beat inflation, to deal with sudden expenses and to fulfill your dreams.
How much deposit should you have at the time of retirement?
The first step in retirement planning is to decide how much money you will need to live your life smoothly once you retire. This will tell you how much fund or corpus you should raise to get that amount every month. For this, you can take the help of any financial planner or retirement planning calculators available on the internet. An even simpler formula is to collect at least 20 times your annual expenses as retirement corpus.
Investing in a product that beats inflation
Estimating expenses without calculating the effect of inflation also makes it difficult for you to operate in a limited fund. To avoid this, before retirement, one should invest in such investment medium which is capable of beating inflation. For this, you should take the help of equity and mutual funds. If you currently have an expenditure of Rs 50,000 per month, then after 25 years at the rate of 8% inflation, the same expenditure will increase to Rs 3.5 lakh per month.
Diversify Portfolio
The most important thing for retirement planning is to diversify your investment portfolio. If you start retirement planning from the age of 35, then make 50% of your savings keeping retirement planning in mind. You can choose investment medium like Equity, EPF, Mutual Fund. These investment products will work to beat inflation and get better returns.
If you have started retirement planning at the age of 25, then you have 60-25=35 years for your retirement. On retirement you need a corpus of Rs 4 crore and to get 4 crore you have to invest Rs 4000-4500 every month in mutual funds.
Debt investment after retirement
Investing in debt is safe but not inflation-beating. Rising inflation, falling interest rates make it difficult to earn a good monthly income. Therefore, put the money collected on retirement in equity along with debt. Equity investment is good for 20 years after retirement.
Carry health insurance
To reduce the financial risk after retirement, definitely take health insurance. The problem increases with age. The cost of treatment has increased very rapidly. It can work to eliminate your hard earned money. To avoid this, keep a health insurance cover. This will serve as a great help in the later days.
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