The post-retirement life is also essential aspect while planning an investment strategy. It is not only for those approaching the retirement stage but also for the young ones. Planning about post-retirement corpus at the beginning of your career could be an excellent decision. Analyse and invest in some of the secured long-term assets. This method can help you build good wealth by the time of your retirement.
Here is what you can do to create a good retirement corpus:
1. Calculate your expenses
To begin with, you need to have a clear picture of your expenses. You can calculate the expenses using this checklist:
a) Collect all your financial statements/ documents, bills, etc. Analyse the inflow and outflow of money in your bank account
b) Make a list of all your monthly, quarterly, or yearly expenses
c) Segregate the list on the basis of:
i. Fixed expenses: These are the most critical expenses that you cannot control. For example house rent, EMI, gas water bill, education, medical, insurance etc. These can be monthly, quarterly, half-yearly, or yearly.
ii. Variable expenses: These are the expenses that occur frequently, but the amount keeps varying. Such expenses are groceries, light bills, toiletries, etc. Some of these here are controllable to minimise the expenses.
iii. Miscellaneous expenses: These are non-frequent expenses that can occur at any time with varying amounts. These expenses include shopping, clubbing, holiday, chilling with friends, movies, restaurants, etc. These recreational expenses are entirely under your control. You can choose to control it as per the situation.
Performing these activities will make you clear about your inflow and outflow, how much to save out of it, and how much to invest.
2. Invest in multiple instruments
Once you know your earning potential, you can begin with the investments. You must always spread your investments across different asset classes. This reduces the risk of losses. If you decide to invest in mutual funds, you must diversify your investments into different companies and asset sizes like small-cap, mid-cap, large-cap. This strategy helps you build a good investment portfolio.
These are very beneficial as they are:
Mutual funds for retirement are very flexible to adapt than pension plans or fixed deposits. These do not have any investment limit, and you can withdraw them partially or entirely whenever you like. Re-investing is also easy with mutual funds.
These are much more accessible as everything about your funds is at your fingertip in your mobile app. Also, you can study the performance of your and other mutual funds. It is very essential to have a steady income post-retirement. Mutual funds are very efficient for providing such income without much risk.
It is not a hidden fact that pension income is also taxable as regular income. Mutual funds for retirement also provide an option for tax savings. You can invest in debt mutual funds which are tax-free up to Rs. 1,00,000.
Invest in Mutual Funds
3. Get monthly income
You can also earn monthly income by investing in Fixed Deposit (FD) and Systematic Deposit Plan (SDP). If you are approaching retirement, you can always invest in the above options.
Investing in non-cumulative fixed deposit allows you to earn regular payouts. You need to invest a lump sum amount for a specific period. You can choose monthly, quarterly, half-yearly, or yearly payout frequencies. As per your choice of payout, you will get your returns post maturity. It is a good option for those dependent on a regular income to meet their financial goals.
Another option for investment is a Systematic Deposit Plan. An SDP allows you to invest monthly and even earn on a monthly basis with a minimum amount of Rs. 5,000. Each deposit acts as a new FD and matures independently based on your selected tenure. You can make multiple monthly deposits within a tenure ranging from 12 to 60 months.