You should never underestimate retirement planning at all. It is one aspect that deserves careful focus when you start earning and ideally as early as possible in your working life. Do not make the mistake of selecting an investment plan that will help you amass sufficient money for your post-retirement years. Here are some effective strategies that may be helpful.
Strategies that You Can Use for Retirement Planning
Building the right investment plan for retirement is highly necessary. Here are some strategies worth considering in this regard.
- Work out your investment allocation first. Check how much you can afford to allocate for retirement planning.
- Once this is fixed, compare multiple retirement plans and investment options that you can choose for the future.
- You can consider a guaranteed plan which offers fixed returns without market-linked risks. These usually offer decent returns, which may otherwise be lower than some plans with higher market risks. There is also life coverage while you invest in diverse market-linked instruments. Bonuses and other options may also be available.
- ULIPs (unit-linked insurance plans) are another option, which offers tax benefits like guaranteed plans, along with investment returns (you can choose the instruments to invest in and switch them as you go along) and life coverage as well. You can thus strategically manage your risk levels with ULIPs and use them to build a substantial kitty for your retirement.
- NSC and PPF- PPF comes with a 15-year lock-in period and comes with relatively lesser risks. You can invest up to Rs. 1.5 lakh annually and get deductions under Section 80C. The interest earnings and maturity amount are both tax-exempted as well. The National Savings Certificate (NSC) is another government-supported investment choice that allows you to invest as per your initial financial circumstances and get fixed and steady returns down the line.
- You can also consider investing in other avenues, like retirement plans offered by insurance companies, and build a mix of investments like direct equities, tax-saver fixed deposits, and NPS (National Pension Scheme).
Conclusion- Crafting the Right Investment Strategy for Retirement
One of the top strategies that you should employ is to keep diversifying your investments. Do not keep all your eggs in a single basket, since it will leave you vulnerable towards risks in case this investment does not live up to your expectations. Stay invested for a longer duration and begin early for compounding investment returns and wealth creation. You can also choose to build a future monthly income stream with annuities or pension plans. However, choose how much of the maturity amount you wish to get as a lump sum and the percentage that you can allot for your pension.
Early investments are the lifeblood of building a handsome retirement corpus without compromising on other financial goals. Compounding is the key towards helping you save a decent amount for your post-retirement life. Also, while calculating how much you will require in the future, do not forget to account for inflation.
