Hello,I am 40year old.Monthly income is 1Lac so pl tell me how can I create storing wealth after retirement
Ans: Wealth Creation at Retirement
Assessing Your Financial Position
Your income is Rs 1 lakh per month.
You are currently 40, which means you have 20 years before you attain the age of 60 and retire.
There, you need to plan well to ensure a comfortable retirement.
Setting of Financial Objectives:
As defined, your retirement corpus
Estimation of the living expenses on a monthly basis after retirement
Take inflation and rising health into consideration.
Building of Emergency Fund
Save 6 months' worth of expenses in a savings bank account.
It would provide financial security in case of emergency
Division of Your Income
Savings and investments should be 30% to 40%.
That would work out to about Rs 30,000 to Rs 40,000 per month.
Systematic Investment Plan (SIP)
Invest Rs 20,000 to Rs 30,000 per month in mutual funds.
Junk diversified equity funds for growth.
Balanced funds invest in a mix of equity and debt.
Public Provident Fund (PPF)
Invest in PPF for tax-free gains.
Try and invest the maximum every year.
National Pension System (NPS)
Invest in NPS for a regular income post-retirement.
It provides tax benefits under Section 80C and 80CCD.
Health Insurance
Ensure adequate health insurance coverage.
This safeguards your savings from medical emergencies.
Term Insurance
Secure your family's future with term insurance.
Ensure that the sum assured is sufficient to cover your liabilities and family needs.
Diversification of Investments
Invest in a mix of equity, debt, and gold.
Diversification reduces risk and enhances returns.
Regular Review and Adjustments
Review your investments annually.
Adjust based on market performance and life changes.
Increasing SIP Contributions
Increase SIP amount by 10% every year.
This also leads to a larger corpus getting built over some time.
Avoiding Real Estate
The real estate investments can be illiquid.
Financial assets are much better in terms of liquidity, as well as growth.
Avoiding Index Funds and Direct Funds
Index funds may not be able to perform better than actively managed funds.
Direct funds need to be actively managed; regular funds provide for professional management through MFDs with CFP credentials.
Final Insights
Set clear financial goals. Start investing a majority of your income in diversified investments. Periodically review and rebalance your portfolio. Get adequate insurance coverage. Let not life drift by without disciplined investing and periodic reviews. Retire comfortably.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner,
www.holisticinvestment.in
