2. While all of us seek a retired life
with adequate financial support ,
most fail to plan for it in advance.
Some believe that children
would look after them ; some
believe their savings or investment
in house , gold would be enough
while some leave it for the last
minute.
3. With our living and medical costs
increasing at a frenetic pace , it is
difficult to estimate the expenses to
sustain our lifestyle in the sunset years.
Hence, it is crucial that we begin to
financially plan for retirement early in
life.
Today, key determinants of one’s
retirement corpus are inflation , that
can erode the value of our investments ,
and higher life expectancy.
4.
5. The biggest benefit of starting early
is the power of compounding which
works best across longer time
horizons.
For example , if a 25-year old
individual wants to retire at the age of
60 and wants to accumulate a Rs 1
crore corpus , he needs to save around
Rs 2,635 per month at an annualized
growth rate of 10%.
6. However , the monthly investment
increases to Rs 4,430 and to Rs
7,540 and Rs 13,170 if the start is
delayed by five,10 and 15 years ,
respectively.
Thus , the sooner one starts
investing , the better.
7. The investor’s age is important
when considering the mode of
investment .
Opting for investments with
guaranteed returns - may be a safe
option for someone nearing
retirement but not for a young
individual whose risk-taking ability
is high.
8. A younger person is relatively well
placed to invest in high-risk high-
return asset classes such as equity ,
which tend to give superior returns in
the long term.
Investing via systematic investment
plans (SIPS) in equity mutual funds
would be best way to look at equity
investments.
9. This includes :
risk profiling
identifying all your financial goals ,
including retirement and
preparing a cash flow statement
10. It helps to identify the retirement
corpus after taking into
consideration inflation, life time
goals and returns on the
investment portfolio.
11. One must regularly revisit ones
portfolio to ensure that
underperforming instruments are
weeded out while ones risk profile
tallies with the asset allocation that is
being followed.
12. With the increase in life expectancy
levels and the nuclear family system , it
becomes ever so important to plan for a
financially independent lifestyle post
retirement.
And an individual should fortify his
retirement planning by following the
principles of financial planning.
