The hectic routine of getting up in the morning and scurrying off the busy streets blocked with traffic just to reach your desk on time and then getting back home with the day’s stressful events on your hunched shoulders, being greeted with a hot cup of chaai and the laid back night viewing of your favorite television program, has finally ended. Your dream for being a responsibilities-free individual has finally come true. But what happens during this low or nil income period? Were you prudent enough to take the necessary decisions during your entire employment tenor to save up for the rest of your post retirement life? If so, how should your finances be treated?
As a prudent investor, in your early stages of your career, you should have planned out the age when you wished to retire. With the help of that information your funds and finances that are required for your post retirement life can be easily assessed. Now, with all the Mutual funds and stocks in your account, here are certain things that you need to consider.
Since, you have retired; you need not be exposed to risk. If you have direct stocks in hand, open a Demat account that will help you dematerialize your stocks. Make sure that you do this immediately. Demat accounts can be opened with your stock broking firms, if you are associated with them or it can also be opened with any bank which offers this facility. One should realize the point of difference between a Demat account and a trading account. The former involves the actual buying and selling of shares whereas the latter provides custody for your shares. Under the Demat account, you have the advantage of redeeming SBI tax advantage which is provided only after having crossed the mandatory 3 year lock in period.
Prior to retirement, there are a certain set of things you should have done. Firstly, you should have converted your stock portfolio during a point of time where your retirement was only about 3-5 years ahead. Secondly, the process of converting your stocks in the Demat mode should have been done in a phase by phase method. With this you can ensure that your returns are not hampered when the markets incline downwards. For example, if you planned to demat all your shares in one day, if at that point of time, the markets were low, and then you will not be able to anticipate much higher returns which you could have otherwise. It is true that you do not have a control on how the markets react. But there is always a degree of anticipation that one can expect in the future period. This is possible by gaining primary knowledge about the markets from credible sources.
If you have any sectoral funds in your portfolio, make sure that you opt out of them since a sectoral fund’s performance typically depends on that particular sector’s performance. So if you have invested a huge sum with the anticipation that you will earn higher returns, it may not always be the case that the particular sector will give you lifelong profits. Bubbles burst. Sometime due to gestation period in the infrastructural projects, that are quite common in India due to numerous reasons, your hard earned money gets stocked up for a long period of time. Loans like home loan, personal loan etc might be your urgent requirements if you do not have funds to finance your requirements. Another point is that, if you still have stocks in large cap funds, try not to get out of them, they are assumed to provide you with good returns. Other avenues like, investments in gold through ETFs, FMPs, FDs etc can be exhausted for healthy returns.