Retirement is the time of the life when an individual should just bother of having the time to do nothing, worry about nothing and live a peaceful life with the monies saved and invested to get the rightful returns for a safer future.
There are various reasons why retirement planning has become imperative today: longer life span, increased medical costs, inflation etc.
Mentioned below are a few options which could be considered:
Equity: Traditionally discouraged as a retirement planning tool, it could give your investments a boost if you start early.
Insurance: This one is popularly used for retirement planning. Experts say it should only be used as a risk cover and not as an investment tool.
Provident Fund and Public Provident Fund: The all-time favourite option. Our grandfathers believed in these low-risk schemes implicitly.
Fixed deposits: Safe and secure, but may cower under inflation with their low returns.
Mutual funds: Preferable one, this. There are the professionals whose experience and expertise will come handy.
Property: Totally ever-appreciating asset in the long run, especially with the real estate boom. Small catch: the liquidity concern. Not everyone has money on hand to invest.
You can also invest in Debt products, bonds, debentures, National Savings Certificates etc.
So what are your options like?
Option 1. Pension plans
An ideal for retirement plans because they provide a cushion of debt in your portfolio and help you diversify. The advantages:
i. If you invest up to Rs 1 lakh in these plans, you are eligible for a deduction from your taxable income. What this means is, your taxable income comes down by Rs 1 lakh, and you stand to pay lesser tax.
ii. After you retire, you can withdraw one-third of the fund balance as a lumpsum, tax free. The rest of your money will be invested in an annuity plan. You could choose to have a monthly or quarterly income from it. (Note: annuity is taxable.)
Option 2: Unit Linked Pension Plans
These are good if you don't mind a little risk and policy monitoring. Here are some ways you could go about them:
i. You could invest your funds in aggressive equity schemes.
ii. You could switch funds across schemes (from debt to equity and vice versa), as and when required. Switches are exempt from capital gains tax and transaction fees (some companies do charge though).
iii. Unlike mutual fund investments, you could stay away from entry loads when you re-enter equity funds in your ULIPs.
Here's a tip: a mix of these could give you the best returns.
Source: http://wealth.moneycontrol.com/
Follow us : www.facebook.com/karvyprivatewealth
There are various reasons why retirement planning has become imperative today: longer life span, increased medical costs, inflation etc.
Mentioned below are a few options which could be considered:
Equity: Traditionally discouraged as a retirement planning tool, it could give your investments a boost if you start early.
Insurance: This one is popularly used for retirement planning. Experts say it should only be used as a risk cover and not as an investment tool.
Provident Fund and Public Provident Fund: The all-time favourite option. Our grandfathers believed in these low-risk schemes implicitly.
Fixed deposits: Safe and secure, but may cower under inflation with their low returns.
Mutual funds: Preferable one, this. There are the professionals whose experience and expertise will come handy.
Property: Totally ever-appreciating asset in the long run, especially with the real estate boom. Small catch: the liquidity concern. Not everyone has money on hand to invest.
You can also invest in Debt products, bonds, debentures, National Savings Certificates etc.
So what are your options like?
Option 1. Pension plans
An ideal for retirement plans because they provide a cushion of debt in your portfolio and help you diversify. The advantages:
i. If you invest up to Rs 1 lakh in these plans, you are eligible for a deduction from your taxable income. What this means is, your taxable income comes down by Rs 1 lakh, and you stand to pay lesser tax.
ii. After you retire, you can withdraw one-third of the fund balance as a lumpsum, tax free. The rest of your money will be invested in an annuity plan. You could choose to have a monthly or quarterly income from it. (Note: annuity is taxable.)
Option 2: Unit Linked Pension Plans
These are good if you don't mind a little risk and policy monitoring. Here are some ways you could go about them:
i. You could invest your funds in aggressive equity schemes.
ii. You could switch funds across schemes (from debt to equity and vice versa), as and when required. Switches are exempt from capital gains tax and transaction fees (some companies do charge though).
iii. Unlike mutual fund investments, you could stay away from entry loads when you re-enter equity funds in your ULIPs.
Here's a tip: a mix of these could give you the best returns.
Source: http://wealth.moneycontrol.com/
Follow us : www.facebook.com/karvyprivatewealth
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