www.SipIndiaSip.comYour Private Wealth Managers
Corporate Office @ G-4, Sector-3, Rajnigandha Chowk, Noida
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Do your Retirement Planning…..TODAY !!
Retirement has changed radically over the last several decades in India. Years ago, when you expected to work most of your life for a single, large employer, you could
count on a pension. Now at the time of retirement, you should have enough money which should be enough to maintain your same living standard as you were
maintaining before retirement.
Most importantly, it means retirement planning must span the entirety of your adult life --- it is not just something you figure out while cleaning out your desk the day you
turn in your keys and say goodbye to co-workers. Additionally, good planning takes time and effort and you bear the responsibility for steering your own course, whether
it be done on your own, with help, or by delegating to professionals.
In general, the more you maximize your income and saving and control spending while working, the better off you will be in retirement. Obviously, the fewer resources you have and the more challenges you face, the more important it is for you to be fully
engaged in understanding your options for retirement planning, get the expertise you need, and make good decisions.
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How Much Money Will You Need for Retirement?
Whenever I ask my clients when discussing their retirement plan is, ‘how much income do you need to maintain your current lifestyle in retirement? Not surprisingly,
for the vast majority the answer is, “I don’t know,” or they’ve made inaccurate assumptions. If the assumption is too high, the goal of retirement may seem
absolutely unattainable, and the entire planning process is discouraging. If the assumption is too low, which is most often the case, the retiree could run into a
difficult financial situation later in life and have to make drastic, unwanted changes. The main goal before you retire is to make sure that you have enough money when
you do retire so you can maintain your standard of living. How much is enough depends on when you wish to retire, what your anticipated living expenses will be,
what rate of return you can expect on your savings, and whether you will continue to work at all after retirement.
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The anticipated date of your retirement affects two important factors: how much time you will have to save up for retirement and the number of years you can expect to live
after you retire. A qualified Wealth Manager helps you sketch out your retirement plans in terms of timing and lifestyle considering the expected inflation in rupee value. Once you put these down on paper, the financial planner can help you calculate how
much money you need to have set aside to meet your goals and how it should be invested. Unfortunately, the answer will likely be that "You'll need more money than
you think." Indians are living longer than ever before and inflation inevitably eats away at the value of amount saved.
By providing a few details about yourself and your finances, the Wealth Manager can
predict how much you need to save to achieve your retirement objectives. These financial advisors can provide a rough idea of about your target for retirement. They
will also adequately assess the risk of running out of money.
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Once you have an idea of how much you will need, here are other factors involved in determining how well you will manage your retirement savings:
1. The total amount you contribute over time
2. How you save (all at once or little by little)
3. What kind of investment you use (savings accounts, bonds, stocks, mutual funds)
4. How much your savings or investments grow, less expenses
5. How long you have before you begin spending your retirement savings
6. How you plan to take money out (again, all at once or little by little)
7. How and when your money will be taxed and by how much
8. The inflation rate over the life of your retirement planning.
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When to start Retirement Planning?
It is never too early to start retirement planning.
With the inflation rising to a record high, simply thinking about the retirement amount you would need after several years is not enough. For you to have a sufficient corpus for the sunset years,
systematic planning early in life is a prerequisite.
If one assumes that an average individual works upto the age of 58 years, it would mean that he/she would work for approx 30 productive years and further if he/she continues to live upto
88 years, then he would leave a retired life for 30 years. Therefore the challenge for an individual is “how to fund these UNPRODUCTIVE retirement years. This is 30: 30 challenge.
If you start investing Rs. 10,000 per month at the age of 28 years (for 30 years) till the age of 58 years and the rate of return is 12 % p.a. then the corpus at the age of 58 will be Rs 3.53 crores. But if you invest it at the age of 33 (for 25 years), the corpus will only be Rs. 1.90 crores. Thus it is better to invest as early as possible to get the benefit of power of compounding. The Wealth Managerwill guide you the monthly amount which is required to be invested to get the desired corpus at the time of retirement. Start by investing a small amount every month, and increase it
gradually. The best way to accumulate a nest egg is saving money regularly and investing in instruments that help it grow.
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Where and how to invest for Retirement?
When I discuss with my clients about various options for investment then most of them don’t know where to invest. There is an old saying, “Slow and Steady wins the race”. Same rule applies here… if you see the younger generation, you will see that their spending is normally without planning for the future. The tales of youngster
being in debt and depending upon credit cards is becoming a common phenomenon. Eating out and shopping is not a rare phenomenon anymore, rather a common
weekend activity.
Despite starting the months with the decision to save at the end of the month there is hardly anything left in the bank account. The intentions are often not reflected in the
action. Why is this generation not being able to save and invest successfully? A miniscule percentage in our country invests. A simple change in lifestyle could possibly
change this habit.
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In this scenario, it is necessary that we invest a fixed amount per month regularly and then increase it as per your capacity over a period of time. In old time Recurring
Deposit (RD) were very popular but in that the rate of return is very low. It hardly beats the inflation. Now a days SIP in various mutual funds are good options but before
investing in mutual funds it is important that you take the help of good Wealth Manager.
As people age, their asset allocation has to undergo change. When they are young they need to accumulate wealth because they have time on hand. At this age
investment in equities can be good option. However it is not advisable to invest in equities directly. You should invest in equities through good Mutual Funds. However as people approach middle age, the proportion of equity in their assets needs to reduce while the proportion of debt needs to increase. It is important to note that the mutual funds yield good return in the long term which you should consider 10 years or more.
Before investing in Mutual Funds it is important to take the help of good and experienced Wealth manager who can guide you which fund to chose keeping in mind
your retirement goal? A successful investment plan is that which is reviewed and boosted periodically.
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Where to invest the retirement fund?
After retirement you need regular and steady income to meet your day to day expenses and to maintain your living standard. Thus the corpus available to you at the time of retirement should be invested in such a way so as to give you risk free return every month. At this time you are not advised to invest the money in equity as it is
quite risky at this age. You have to invest in either Income Funds of mutual Funds or Fixed deposits in the commercial banks. There is some scheme of Post Office also
which give regular return when you deposit a fixed amount there.
Thus you have to quite careful while investing your hard money available to you at the time of retirement as you have to use its return and not the fund for your expenses. It
is like eating eggs daily rather eating the hen.
It is there important that you should start your Retirement Planning now.
Enjoy your retirement Life Respectfully !
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