Here’s the best definition of retirement: Doing what I want, when I want. Well, if only things were as easy as they seem. But what if we told you, they are? Yup, there are a few things that threaten the security of your retirement. However, timely retirement planning will help you get rid of those threats. Stay away from poor financial planning, things that will take you off the right financial track, and work towards a secure retirement. Read our tips on how you can achieve this. Follow our pointers listed below and thank us later!
Too Little, Too Late
While it may be difficult to decide when to invest and how much to invest, saving too little or starting too late will only invite trouble. If you want enough money when you retire, you have to start planning and investing at the right time in the right assets. Investing too little will be of no use. So, always calculate how much amount you ought to invest before you actually invest. While calculating, take the amount you plan to invest and the interest rate on the scheme that you plan to invest in, into account.
Also, time is an important factor while investing. The earlier you start, the better off you will be at the time of retirement. If you are in your thirties, you have a decade more than what you would have if you start investing in your forties. It’s advisable to at least start retirement planning in your thirties because once you are in your forties, you will have very little time to save up. What’s more? The time won’t be enough to generate a retirement fund that is good enough to deal with retirement. If you want a healthy and secure retired life, it’s important to start early. Got it?
Using Your Retirement Fund Too Soon
When you start investing in retirement plans, don’t forget to put some money into an emergency fund too. You certainly don’t want to raid your retirement fund in case of an emergency. You can invest in numerous retirement plans. Be it Employee Provident Fund, Public Provident Fund, Pension Plans or a simple Fixed Deposit. However, if you close any of these schemes prematurely, you will have to pay a pre-closure penalty. A debt Mutual Fund might be a better option.
Additional Reading: Retirement Planning For Everyone
Economy And Inflation
Always stay updated about India’s economic growth. Like it or not, make it a point to read about inflation. This will help you figure out where you stand with your finances not just on a national level but globally too. Honestly, in the long-term, the Indian economic growth story is expected to be positive. Also, when you are investing, take inflation into account. If you fail to do that, what seemed to be a good return on investment ten years ago will seem barely any money now. And you will only regret having invested in that particular scheme. So no matter what you plan to invest in, take inflation into account. Research well in order to avoid any regrets. Cool?
It’s good that you are pretty positive about your life. We are really happy for you and your positivity that nothing bad is ever going to happen to you. However, life may not be as predictable, as you might like it to be. In fact, you may be in the pink of health and might be one among those who work out every day. But accidents happen, don’t they?
No matter how safely you lead your life, some things just can’t be predicted. You might be the fittest person in your family and friends circle and possibly, also the best driver, but not everyone around you is a good driver, right? Imagine being stranded in one of these situations without Insurance cover? You will not only lose your emergency fund but could also drain all your savings. And trust us, we aren’t exaggerating.
Don’t ever stay uninsured or in a state where your Insurance policy has lapsed. If you fall under any of the mentioned categories and you become seriously ill or get into an accident, your finances will never be the same again. You will be left struggling to make ends meet. What’s more? You may have to use your retirement fund before time. And once you raid your retirement fund, building it all over again will be next to impossible. So, make sure you find a financial advisor who will help you choose a good Insurance policy. You can choose one based on your requirement. Got it?
Putting The Children First
Good things happen when you set your priorities straight. And even better things happen when you give priority to yourself over everyone else, including your parents and children. Yes, we know that this sounds a little selfish but sometimes you’ve got to think about yourself before thinking about others. Of course, we aren’t saying that ignore your children and parents altogether, but you just need to set your priorities straight. Let’s clarify what we mean.
Here’s the thing: What if you had to choose between your child’s higher education and your retirement plan? A lot of Indian parents would go with the former, compromising their own future. However, think about it practically. If your child really wants to study further, he or she can do it on their own. They can always work hard towards getting a full scholarship. Even an Education Loan can help. However, once your retirement planning has gone for a toss, can you really do anything about your own future? Not really. Likewise, if you love your parents a lot, don’t forget to invest in a good Health Insurance policy for them. This will help you save a lot of expenses in case something were to happen to them. Got it?
Variety Is The Spice…
NEVER ever place all your eggs in the same basket. What do we mean, you ask? It’s pretty simple. Don’t put all your investments in one scheme alone. Never heard of variety is the spice of life? Well, it’s quite true even with your finances. If you want to enjoy your life post retirement, we bet you don’t always want to be worried about the ONE scheme that you invested in, right? So, it’s important to have a diverse portfolio.
Here’s a situation: Imagine that you put all your money in the stocks of a company which seems to be doing well at the time of investment. However, 10 years down the line, the company is about to shut down and the stock prices have dropped steeply. In this situation, all your money will go down the drain and you will be left with lesser money than what you started with. And we’re sure that’s not something you want once you retire.
It’s totally inadvisable to invest all your savings in one company or a single financial product such as a Fixed Deposit. You ought to diversify your portfolio. This will not only help you reduce your risks, it will also help you get higher returns. You can invest in stocks of multiple companies in various sizes or in Mutual Funds of different types. Don’t wait any longer to diversify your portfolio, okay?
Power Of Pension Plans
Don’t ever underestimate the power of pension plans. At 25 years of age, you may not seriously think about investing in pension schemes. Sometimes at 30 too, you may feel that it’s too early to start putting your money into pension schemes. However, never ignore the pension plans offered to you, especially by the company that you are working for.
For example, if you have the option to contribute a small amount every month towards Employee Provident Fund, take that up. When you contribute to the Provident Fund, the same amount is also contributed by the organisation where you work. There are numerous other pension plans out there. You only need to choose the one that works best for you. You can always invest in the Public Provident Fund or some Pension Fund. If you want to retire happily, you absolutely cannot ignore pension plans. And as repetitive as this might sound, the sooner you start, the better.
Well, now you know all the amazing yet easy tips to a peaceful retirement. It’s up to you make your post-retirement years the golden years of your life. Now you know how to do it too. So, don’t wait too long before you start investing for your retirement. If you are already looking for options to invest, wait no longer. Explore your options right away at BankBazaar.