Why Retirement Planning Should Not Be Ignored?

Many never give retirement a serious thought. Probably, it is the least of priority especially for someone who is in the mid-30s or early forties. People often think that they have a long way to go and retirement planning should be undertaken only when is approaching retirement. This is a wrong assumption. This does not mean that you should start worrying about retirement now, but you must consider various options and start investing as and when the opportunity presents itself. 

Metlife India Insurance carried a survey that revealed eye-opening statistics. Nearly 75% of working people rarely gave any thought to retirement planning. This is shocking considering that this figure stands at 55%, 45%, and 30% for Australia, the US, and the UK respectively. Indians, on the other hand, have a lackadaisical approach towards retirement planning. Nearly 70% of Indians are concerned about outliving retirement money. Astonishingly only 22% of Indians actually plan for retirement.

 When it comes to retirement, culture has a huge impact. In India majority of people treat their children as a retirement plan. While it is the duty of a child to support his parents, it could be a struggle in a rapidly changing economic scenario. In India, social security is non-existent and hence people have to save enough so that they can carry themselves with grace in old age. True, people have other goals in life but retirement planning should not be ignored. 

When it comes to money you must always remember the concept of the time value of money. The time value of money (TVM) is the concept that the money you have now is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received. This explains the importance of investing early. 

How much money is enough for retirement? There is no fixed answer to this question. Websites like www.investonline.in provide state-of-the-art intelligent retirement planning calculators that can help you determine the corpus needed for retirement. While planning for retirement you must factor in the effects of inflation. For example, the value of Rs 1,000 will be a lot less than 30 years from now. You need to figure out the retirement corpus required and start saving the money now. 

If you are unsure of investments you can seek the help of a qualified financial advisor who will suggest you appropriate investments after evaluating your risk profile. This is very important as investing without understanding your risk profile can lead you to make bad decisions.

Comments

Post a Comment

Popular posts from this blog

How SIP Calculator Can Help You?

Image
  www.investonline.in  website provides a tool known as an easy-to-use SIP calculator for comparing different plan options. You can use SIP calculator to gauge the potential returns your capital will get in future. Example: If you invest ₹1,000 in a ₹50 per unit SIP, what kind of returns will you see? You can select a 5-year rolling return for your calculation. The result shows an expected growth rate of around 12% per annum for the ₹1,000 investment. The longer the period, the higher the returns. The tool calculates returns as a percentage. If your contribution is made for a 15-year period, the estimated return on your investment will be in the range of 15.5% to 17.7%. This shows that SIPs have the potential to deliver higher returns compared to other investment options. However, you will also get higher risk. Minimum Invested Amount Most SIPs come with a minimum amount for investment. This is what the fund house requires as part of the SIP contract. The minimum amou...
Read more

Do you really need international funds in your portfolio?

Image
Answering yes to the above question means that now is a good time to review your international exposure and rebalance your portfolio. If you find that you do need international funds in your portfolio and you still have some money left to invest, then consider adding an international fund to your portfolio. You should be aware of some risks, though. International funds are complex International funds are complex in several ways. First, they often have more than one series of shares and different types of units are available. So, before investing, you need to ensure that you understand how the units are listed, traded, and are tax-efficient. In addition, while the underlying portfolios are generally similar, the funds can vary widely in their credit ratings, liquidity, liquidity requirement, etc. You have to consider a lot of different factors before investing in an international fund. What makes international funds volatile? International funds are more volatile In gener...
Read more

Why Arbitrage Funds Are Attractive For Conservative Investors

Image
The markets are trading at lifetime high seas but many investors are jittery and are hesitant to invest in the present market. Historical e equity funds have delivered above-average returns and will continue to remain the best asset class. However, equity investments are volatile and one should always and sure of the safety of their investments during volatile times.  If you find present levels of the markets quite high and fear volatility you can invest in arbitrage funds. The objective of the arbitrage fund is to preserve capital while delivering modest returns on capital invested. Arbitrage funds invest an equal portion of equity and futures. For example, if the fund buys 1000 shares of X company encash market it sells the same number of shares in the futures market. They also invest up to 35% in debt. This strategy ensures that if there are no arbitrage opportunities present in the equities they can generate the income from the debt investments.  Arbitrage funds make money...
Read more