Planning for a leisurely, stress-free retirement experience is probably on top of your financial goal bucket list. So, how do you go about it in an organised manner?
A mix of planning and affirmative action is necessary. For instance, you can optimise spending, build an emergency fund, open a PPF account, and start systematic Mutual Fund investments.
However, one of the key challenges is to make your retirement corpus last through your lifetime, so you and your family can enjoy peace of mind in the golden years. Here is a strategy to help you achieve these goals.
Identify retirement age and corpus value
The first step is to estimate at what age you aim to retire. Accordingly, you can design a plan that aligns with this aspiration. For instance, if you aim to retire at 65, and anticipate living till 90, your retirement corpus will need to last for 35 years. On the other hand, if you retire at 55, this means it will need to stretch for 45 years.
Calculate your retirement corpus value
The next step is to calculate the ideal value of your retirement corpus. You can leverage the benefits of a retirement calculator to do the math. Input values such as your life expectancy age, current age, monthly expense figure, and current value of retirement corpus, to get an estimate of how much you need to save. Once you have access to this figure, the next step is to build a sustainable, and consistent investment plan.
Balance risk with returns
When building an investment portfolio, you need to keep it diversified and balance the risks with returns. Here is an example of how to strike a balance. For instance, investing directly in the share market has the potential to earn significant returns over time. However, stock market investing comes with greater risks if you are not a savvy investor.
Instead, consider going in for an equity-based Mutual Fund investment. This instrument comes with a designated relationship manager who capitalises on market opportunities, while also making strategic shifts in a volatile market.
Also Read :Who should opt for Mutual Funds?
Top investment opportunities
It is important to have a clear understanding of the different investment strategies available to you. Here is a brief overview of some of the most popular investment strategies that you may want to consider:
Launch a Mutual Fund SIP
Investing in Mutual Funds is a time-tested and streamlined way to build your retirement corpus while managing risks. Be sure to check the returns record of the Mutual Fund over a three to five-year period, and the expense ratio, and make an informed decision.
You could start Mutual Fund SIP Investments with just a few clicks via Axis Bank’s Internet and Mobile Banking services. Choose from a range of equity, debt, hybrid, liquid, solution-oriented, and index funds, based on your risk appetite and returns requirements.
Open a PPF Account
Even if you already have an Employee Provident Fund Organisation (EPFO) account, it is advisable to open a PPF account. You can invest up to ₹1.5 lakhs per annum for 15 years. You can get a tax deduction under Section 80 of the Income Tax Act of 1960, and the principal and interest compound at 7.1%.
The most attractive feature, however, is that PPF falls under the "exempt exempt exempt" category of investments, where the principal amount and interest are not taxed. Today, you can open a PPF account with Axis Bank digitally in a matter of minutes.
Also Read :Tips to earn maximum interest on PPF
Additional strategies
While your investment portfolio kicks off, you can also activate a few additional strategies on the side.
- Create a monthly budget and track your expenses, so you do not overspend and are forced to dig into your investment budget.
- Get a part-time job, or start a side hustle to supplement your income and increase investments.
In conclusion
Planning for retirement requires consistency and a systematic approach. You can leverage the SIP feature to automate investments and reduce the pressure on your finances while building your retirement corpus much faster. Investing in MFs is a relatively simple process, and it can be done online. By starting a SIP, you can automate investments and build a savings habit. Enjoy your retirement in peace and sanctity.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. *T&C apply
