At the time of investing you obviously keep in mind one of the most important reasons as to why you opted for this route. Apart from the goals like purchasing a house, buying yourself a car, setting aside finances for your child’s education or marriage etc, accumulating wealth for your post retirement life is also necessary.
There are quite a few important points that you need to bear in mind if you are planning to invest for your retirement. If you are structuring your portfolio with the aim of generating higher returns, you need to reduce your exposure towards equities as you near your retirement. Therefore it is mandatory for you to ensure that your returns for the same purpose are not taxed and if they are taxed they will mostly be in the lower tax bracket in order to attain high returns. But it is important that your exposure towards equities be reduced as you near your retirement in order to safeguard all your returns from market volatilities.
If you are a government employee you are benefitted with the pension that will be provided. But if you are employed in the private sector or are a self employed individual you need to maintain Fixed Deposits since it is the interest on this that can prove to finance your requirements when you have retired. Considering Post Office Savings Scheme among various other retirement schemes, can help you to get assured monthly income after you hang up your boots.
Public Provident Fund (PPF) is important for investors who start saving early in their career life, however if you have been a hold of a PPF account and are retiring, it is assumed that 15 years have been completed. If that is the situation, you either can hold the account for a further 5 years or can wait till the account matures. Although the interest earned on this account is compounded and the cumulative of this is paid out, one cannot expect to get monthly or yearly pay out of the same. But as a PPF holder you have the ability to partially withdraw your funds as and when required. All in all this is a fund that can do you no harm.
All throughout your career you might have followed the route of investing in equities through investments in Mutual Funds using the Systematic Investment Plan (SIP). But as you are a year or two away from your retirement it is advisable that you transfer your funds to Monthly Investment Plan (MIP) so that you get dividends every month. Although the amount of the payout may vary each month since they depend on the performance of the fund. It is important to know that MIPs in Mutual funds have an equity exposure of 25% and which may vary depending on your scheme selection. Therefore make sure that you have good knowledge about the fund you are selecting since it is the performance of which you will be guaranteed returns.
Apart from the investments in funds, investing in life and health insurance policies should have also been thought about as it is important for financing any emergencies which might arise after retirement. If you haven’t purchased any health insurance policies it is important that you buy one immediately since it is the insurance policies that can help you finance your medical emergencies. Ensure that you opt for a general health insurance along with a critical illness cover as this will provide ample health protection for you. Although the proposition of buying a health insurance might be a bit expensive right now, it is very much required.