5 INVESTMENT MISTAKES THAT CAN DERAIL YOUR RETIREMENT PLANS

Creating a financial plan for your post-retirement needs is as important as planning for your other investment objectives. Often, investors delay their retirement planning assuming that they have enough time to plan for their retirement. However, they could not be more wrong. This article explains common mistakes that an investor might make during retirement planning. Let’s understand these blunders.

FIVE INVESTMENT MISTAKES THAT CAN DERAIL YOUR RETIREMENT PLANS

Here are common five investment blunders that can throw you off-track in regard to your retirement plans:

1. Not starting early
   One of the biggest investment mistakes that can derail your retirement plans to several years is not starting early. If you do not wish to strain your pockets, then it is advised to start early. The more you delay in planning and investing for your retirement, the higher corpus you would have accumulate over time. This would also impact your other goals as you would have fewer funds left to allocate to other financial goals.
2. Undervaluing the magnitude of your retirement fund
   Another common mistake is undervaluing the magnitude of your retirement fund and/or miscalculating the expenses post retirement. While certain expenses such as your child’s educational expenses, daily commute to work, home loan EMI (assuming you wish to enter retirement debt-free) would go down, other expenses such as healthcare, medical bills, etc. are likely to go up. What’s more, you must not forget to account for inflation as they can significantly eat a part of your investments.
3. Not exposing your retirement portfolio to equities and equity-related securities
   Equities are a great asset class and investment option to attain inflation-beating returns and earn significant returns on your investments over a prolonged period. This is the reason why equities are an ideal asset class to create wealth in the long run. In the initial years, consider allocating a significant portion of your investments to equities, and as you near your retirement, systematically shift to fixed income investments such as debt funds, bank fixed deposits, etc.
4. Not reviewing your financial portfolio on a regular basis

It is very important to review your financial portfolio on a regular and periodic basis. Your job does not end at mere investing and creating funds for your retirement corpus and waiting for your funds to grow in value. Change in several market-related conditions and fund management style of your investments can result in poor performance of your funds in the future. Even though they offered exceptional returns in the past. Hence, it is important to compare mutual funds and their returns and shift your investments if need arise.

5. Not purchasing appropriate health cover
   As your healthcare and other health-related expenses are likely to shoot up during your retirement, it is mandatory to have a good health insurance cover. Also, remember that your employer-covered health insurance plans will stop to exist during your retirement.

Hope you do not make these common blunders while planning for your retirement. Also, if you have not already started investing towards your retirement fund, do not delay more. Ideally, it is advised to invest in your retirement right from your first salary. Happy investing!