5 Ways To Make The Most Of Your Retirement Corpus

Make your retirement funds inflation proof. Here’s how you can make the most of your retirement corpus.

Retirement planning is one of the most crucial aspects of getting your finances right. No one wants any complications in their sunset years. When it comes to money, you definitely need to be well-prepared to avoid an unwanted shock later.

Additional Reading: Why You Should Start Your Retirement Planning When You Are 30

Planning your finances right so that you get to enjoy the most of those carefree days isn’t that difficult a task. Before helping you make the most of your retirement corpus, let’s tell you about some mistakes that you surely need to avoid. Here we go:

• Don’t forget to keep inflation in mind: Forgetting to take that into consideration can make your retirement savings seem like peanuts. You don’t want that, do you?
• Don’t underestimate your expenses: If you don’t take things like emergencies and health expenses into consideration, you’re likely to suffer. It’s wiser to not let that happen.
• Don’t forget to keep enough funds aside: While saving for your retirement, you must ensure to save for a sufficient period. It’s better to take all the possible expenses in consideration while doing so. It’ll help you in the long run.
• Don’t solely invest in debt: You should invest some part of your retirement corpus in equity for capital appreciation in retirement years. After all, you do need to fight the inflation monster, don’t you?

Now that you know what mistakes you need to avoid, here are six simple ways to make the most of your retirement corpus:

1. Bank Fixed Deposits

When it comes to using a conventional way to invest for a long-term, Fixed Deposits happen to be quite popular. Some of the main features of a Fixed Deposit that make it one of the top retirement savings plan options are:

• Guaranteed returns

Compared to a normal Savings Account or a Recurring Deposit, a Fixed Deposit comes with better returns. The only thing you need to watch out for is premature withdrawal as it may affect your returns.

• Super flexible

Although you end up locking your money for a certain duration, Fixed Deposits give you a variety of duration options to choose from. The lock in period can vary from seven days to ten years. However, this might vary from one bank to another.

• Better risk management

There are a lot of other investment options that can get you way better returns compared to Fixed Deposits. In case you’re looking for a safer way to invest your money, you must look into Fixed Deposits.

• Emergency exit

In case of a financial emergency, you can take up a loan against your Fixed Deposit. Most banks will let you borrow 60 to 90% of the value of your Fixed Deposit.

Additional Reading: 7 Places You Should Never Keep Your Emergency Cash

2. Senior Citizens’ Saving Scheme (SCSS)

As the name suggests, this scheme has specially been created for senior citizens. Features like assured returns, regular payouts and safety of capital make it extremely popular. Additionally, this scheme also comes with tax benefits under Section 80C and also permits premature withdrawals.

In case you decide to opt for this scheme, here are a few eligibility criteria and other key details you need to keep in mind:

• You need to be at least 60 years old or 55 years in case you’ve opted for a voluntary retirement.
• The amount invested cannot exceed the value of the retirement corpus.
• You can’t invest more than Rs. 15 lakhs and deposits can be made in multiples of Rs. 1,000.
• You have the option to open multiple accounts including a joint account with your spouse. In case of multiple accounts, an upper investment limit of Rs. 15 lakhs applies to all your accounts collectively.
• It has a tenure of five years which can be extended for three more years after scheme maturity.
• In case you wish to close the account prematurely, you’ll have to pay a penalty. It’s 1.5%, if you close the account before two years and 1% if it’s closed after two years.

3. Mutual Funds

Investing in the right Mutual Funds can help keep your retirement funds inflation-proof. The amount to be allocated may vary according to your risk profile, but investing in Mutual Funds can deliver higher inflation-adjusted returns.

Additional Reading: 5 Tips To Select The Best ELSS Product

4. Post Office Monthly Income Scheme (POMIS)

This is a five-year investment scheme that comes with a maximum cap of Rs. 9 lakhs under joint ownership and Rs. 4.5 lakhs under single ownership. The interest earned under this scheme isn’t tax exempt. Additionally, this comes with the flexibility of getting the monthly interest directly credited in the Savings Account of the same post office. Alternatively, you can also provide a mandate to get this money automatically transferred from the Savings Account to a Recurring Deposit in the same post office.

5. Tax-free Bonds

Tax-free bonds are mostly issued by government-backed institutions like Rural Electrification Corporation Ltd (REC), Indian Railway Finance Corporation Ltd (IRFC), NTPC Ltd, Indian Renewable Energy Development Agency, Power Finance Corporation Ltd (PFC) etc. The only thing to keep in mind is that tax-free bonds are long-term investments. Going in for them only makes sense if you’re planning to stay patient for at least ten years.

Need more information about the best investment instrument according to your profile and requirements? You’ve come to the right place!