Retirement is the ultimate dream destination of every working professional where they want to relax and enjoy their life without much struggle & worries, especially financial distress. But to have a relaxing and peaceful retirement you must start making investments as soon as possible. Just saving some amount for retirement may not be enough for a comfortable life.
Keeping a small amount every month in retirement kitty may fulfil the basic needs, but will not offer what you would have dreamt of delightful life. You need to demark the savings as retirement and post-retirement as you don’t get a second chance to make such a decision. Thus, it is vital to have a proper investment plan in place for post-retirement.
Refer the following tips to set a proper stage for this,
#Tip 1: Keeping Too Safe Can Be Jeopardy
You would have seen many people saying that they have protected their retirement funds, but they forget it can turn out to be risky. Mostly all investors opt for safe options while investing their corpus because the main aim is to keep the principal intact and get the assured profits as returns. All just stay away from risk that can come as a profitable opportunity. While guarding the principal, investors fail to understand the long-term repercussions where the actual value of the invested corpus will get eroded. You won’t get the real value of your hard-earned money and eventually that will go down.
Thus, it’s advised to put your money in those funds that hold an appropriate equity exposure like blue-chip mutual funds. In this way, inflation of the future will be addressed. It’s not profitable to put your funds in Annuity plans as these financial products are compounded for the long-term period that will decrease the periodic income.
#Tip 2: Be Courageous or Adventurous is Good but in Limits
When you are young, you have ample time in hand and can take risks too but when you are on your verge of retirement or is retired, you can’t play many innings. Any investments made previous would be very different from investments that are made post-retirement. While investing through your Demat account, understand the low-term implications and trends of the market and plan accordingly.
Too much equity in the market for higher returns may not be a good idea and can easily put you at risk. As you have limited time, you won’t be able to wait for the full cycle of the market, thus your aim should remain towards balancing your asset allocations. Create a well-diversified across different asset products and classes through an online investment portfolio. Try to limit your adventure while allocating your assets or corpus.
#Tip 3: Keep Enough Cash Surplus
Regular income in retirement is essential but not all are planned or prepared for it. A little effort towards concrete planning can easily help and protect you in non-favorable market conditions; hence your income remains secured. Creating enough cash surplus can be a wise decision as this will save you if downfall or low-interest or crash happens in the market, thus it will keep you online investments safe. You should save adequate cash that can meet the requirement of at least 3-5 years. This may sound a little impossible task but trust only this holds the capacity of meeting your cash requirement and consequently, you don’t need to liquidate your assets or investment at low value.
When you are earning good profits from your investment portfolio, it is suggested that the positive returns or gains can be used to fill the cash surplus kitty or can be used to invest in high-volatile but low-risk assets.
Remember, income from a pension or investment gains are subject to taxes and your focus should also move in the direction to minimize taxes. For example, if you have invested the money in debt funds for 3 to 5 years, then using Systematic Withdrawal Plans (SWP) you can withdraw the money systematically to get the advantage of long-term capital gain from indexation.
#Tip 4: Don’t Forget About Emergency Funds
Emergency funds can’t be neglected at any cost as they are very vital in life. No matter in which age group you come in i.e. the 30s, 40s, 50s, and during retirement, emergency funds should be in your priority list. The cash allocation in emergency funds increases with time as liabilities and health concerns also grow. You can have health insurance to meet medical exigencies but there remain certain uncovered expenses that need to be managed by self. And when you are young emergency funds can act a helping hand or fall-back plan if you face financial disturbances. So, an emergency fund is an absolute necessity to handle large and unexpected expenses.
Uncertainty is only certain in our life because of which it might be possible that all financial plans or investments made for retirement at a younger age will not fulfill the desired objective or goal. Thus, you should do proper planning for your post-retirement so that you remain comfortable and stress-free. Always remember, liquidity and flexibility need to be important characteristics of your online investment portfolio. You should open Demat account with only that service provider who extends all help in making this true.
Financial planning is not a simple task and if you also find it a little difficult, it’s better to take advice from an expert financial advisor who can help you with online investments and proper asset allocation.
Have a blissful retirement by doing better post-retirement investments.
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