2 Point Retirement Strategy
One of the most neglected issues in our Indian society is that of retirement planning. More surprising and alarming is the fact that most people don't even consider it to be an important issue. In a way, there is a serious lack of awareness about retirement planning. The society is greatly divided between government and private employees.
Government employees get secured retirement through pension after serving a certain period, so understandably they are a little apathetic towards planning. However private employees, despite lack of resources, show similar disdain towards financial planning and planning of retirement.
Your entire retirement planning should be focused on living a comfortable life and maintaining the same lifestyle while you were in employment.
So let's explore the key tools which critical to create wealth.
The Golden Rule
The sooner you start saving for retirement, the longer a period you get to invest, thus you get that much better results. But there is catch to this, long term alone isn’t the only decisive factor in wealth creation. The investment instruments you opt to invest in play an equally crucial role. If you invest in wrong instruments, it's very likely that you may not get the desired results. So let's shed some light on the kind of investment mediums which ought to figure in your investment plan for retirement. However, before we explore the best investment tools, let's first understand one of the most common mistake people make while planning their retirement strategy.
Insurance Isn’t An Investment Instrument
DO NOT look at insurance as a form of investment, as the returns you get from the maturing of your insurance policy/policies is usually peanuts. The sole objective of insurance is to safeguard your and your family's interest from the unfortunate and unforeseen events of life. Over the years insurance companies have misled people into believing that it's an investment medium. Be a responsible investor and thoroughly calculate the payback on your insurance.
Here are some of the investment instruments which will do wonders to your investment planning.
A) Mutual Fund (SIP)
Mutual fund has emerged as a smart investment option in the recent past. The qualities which make mutual fund a good investment option is the kind of options and opportunities it provides. Whether you have short-term or long-term investment perspective, there are plenty of options available to choose from e.g. equity funds, debt funds and hybrid funds. In a way, mutual funds are fairly safe as the funds are managed by qualified fund managers and they are diversified on a large level. So one can determine one's financial goals and start investing in mutual funds to get good results.
It should be a key component in your retirement planning for two reasons. First, the kind of returns it gives. It's compounding benefits are elevate the returns to a new level. Second, when you invest in the mutual fund through SIPs it helps you to reap the full benefits of market volatility as when the market is down you get more units which only means higher returns when the market is up.
B) Equity (Share Market)
Equity investment should be the focal point of any retirement plan. The ratio of investment between mutual funds and equity may differ from person to person, but a sizeable portion of your money should be invested in equity. Over the years, equity has provided the highest returns on investment (ROI) compared to any other form of investment. It outperforms even mutual fund. Hence, Long term Investment is stocks should take prominence in your retirement planning.
Equity has uncapped growth potential, but that can only be exploited if you choose the right stocks. Yes, putting your money in the right stocks is the key differentiator in this form of investment. As picking a right stocks is a tough tasks as it requires plenty of time and good analytical skills, you can subscribe to a stock advisory firm. Advisory firms specialise in providing stocks calls which give good returns.
Source : Share Market Tips
Niveza India Pvt. Ltd. is a Sebi registered research, advisory, and financial technology firm. We have proven experience in providing one of the best performing stock picks backed by best-in-industry service and by money back guarantee.