A foreign holiday, a beautiful home with a wonderful family, no debts and liabilities to repay and a secure financial post retirement life, is the dream of every Indian. Working years together, saving every penny possible, trying to fulfill all the financial responsibilities i.e. from buying a house or a car, financing your child’s higher education and marriage are the basic goals of all Indian families.
The undesirable experience of borrowing a loan for personal expenses, like financing your medical requirements, vacations or repayment of your home loan etc, is something that you might not want in your post retirement life.
In order to save yourself from such a situation, it is important to plan and save a good approximate amount for financing your financial requirements then.
Set aside, religiously, almost 40% of your total savings. As the age advances, so does your responsibilities and your experience. So, as you climb up your career ladder, setting aside 40% of the amount is mandatory. Take a health insurance policy and a critical health insurance cover so that in case of emergencies, these policies can comprehensively cover your financial requirements. Even if your company provides a health insurance policy, find out if it is transferrable if you quit the job or retire. If it is not possible, then opt for a separate insurance cover.
Investing in SIPs can also one of the best routes to raise your finances in the long run. For this it is important to start investing early, as you will be able to take full advantage of savings only if the investments are left aside for maximum of 10 years.
Categorize your financial goals into short term and long term goals and allocate finances accordingly. Avoid getting into EMIs, credit cards etc. Although they are easily to get, it is very difficult to get out of the loan if you do not utilize it with prudence.
Planning and patience is the key to build a strong portfolio. If you want to enjoy a happy post retirement life, cut down unnecessary expenses and save how much you can. Factor in inflation. Every investment opportunity you invest into, see that the rate of return is greater than the inflation rate. Only then you can benefit from your savings corpus.