- Date : 03/08/2023
- Read: 4 mins
To secure your retirement, save and invest in a better retirement fund and plan your portfolio according to your post-retirement goals.
Building a solid retirement corpus is necessary for retirement planning.
Better retirement planning needs better investment options such as mutual funds, the National Pension Scheme (NPS), the Public Provident Fund (PPF), and the Employees Provident Fund (EPF).
Such investment options can inevitably help you secure your desired post-retirement income to live comfortably.
Retirement goals can be achieved by investing in effective retirement investment options. A good retirement corpus will readily offer a 1 lakh pension post-retirement. Understand your retirement goals, identify the time frame by which you retire, and prepare your investment strategies accordingly.
Why is retirement planning essential?
Retirement planning is essential to get a financial backup for emergencies and to continue the lifestyle even after retirement and to tackle inflation. With a planned future, your stress levels will be reduced, and you will have good health. You can realize your dreams and even have ample financial security in your old age.
How to build a retirement corpus?
How to get a Rs 1 lakh monthly pension depends on your current and potential savings. The investment portfolio plays a crucial role in building a retirement corpus.
If you choose to invest in a debt instrument with a 6% annual return, you must invest Rs 87,000 monthly through SIP or build a recurring deposit of Rs 9.6 crore. You need to invest 43 to 44% of your income through SIP, assuming that your income will grow by 10% yearly.
If you opt for a balanced portfolio involving 50 to 60% of equities, you will probably earn an 8% annual return. You must invest Rs 73,000 or 36% of your monthly income into SIP.
If you choose to invest all-in equity, you must invest Rs 60,000 in SIP until you retire. And as you get closer to retirement, shift your investments from equities to fixed-income, reducing equities exposure to 50%. This is because equities are volatile over short periods.
Also Read: How to calculate your retirement corpus?
What are the multiple investment options for building a retirement corpus?
Some investment options that will fulfill your retirement goals:
Systematic Investment Plan (SIP)
National Pension Scheme (NPS)
Public Provident Fund (PPF)
Employees Provident Fund (EPF)
Atal Pension Yojana (APY)
Bank Deposits (FDs)
Real estate investments.
These options and strategies will help you protect your post-retirement income from sudden market crashes. You don’t have to start from scratch if you have existing plans in any of the above-mentioned investment options. For instance, if you have a Rs 50 lakh investment and an EPF of Rs 2 crore at 40, you can reduce your SIP in equity funds accordingly. Always prioritise repayment of loans because it carries high interest, which cannot be settled with equities-based annual earnings.
Find the latest articles on retirement planning here.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.