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Planning a comfortable retirement ensures that you and your family can lead a stress-free life without worrying about financial matters. Saving and investing are two major aspects that are part of retirement planning. One can never start too early. In fact, the sooner you start managing your finances and plan for the future, better will be your savings and income from the alternate sources after retirement.
Start by splitting the monthly expenses into two parts. The regular expenses such as house maintenance, loan repayments, educational expenses and related payments will continue even after retirement. Medical and emergency expenses need to be added to the list. In addition, remember, the cost of living would most likely increase over a period.
Once you have an idea about how much you will need each month, check how much you will be able to get in the form of pension or other retirement benefits. Start saving and investing to make sure you will earn more than what you might spend in the future.
Mutual funds are one of the best ways to invest that can beat inflation. In the long run, these offer good benefits to the investors. If you have 20-30 years for your retirement, SIP will help you accumulate wealth in a healthy manner.
Here are some of the benefits of investing in a diverse portfolio using mutual fund investment.
- Flexibility
- Compared to pension plans, mutual funds are flexible and do not impose any restrictions on withdrawing money when required.
- At any time, you can anytime close the investment and go for another mutual plan. You can withdraw the amount partially or fully depending on your choice.
- Transparency
- Mutual funds are more transparent and allow you to plan a secure future with minimum risks.
- The information can be accessed anytime and you will have a better idea about your investments and savings.
- Tax efficiency
- In comparison to pension plans, mutual fund investments can get some tax deduction benefits.
- Long-term capital gains and Equity mutual funds are exempted from tax upto a denomination of Rs. 1,00,000/-
- The investment made in ELSS can be exempted from tax under Section 80C. The upper limit for tax deduction is Rs. 1.5 lacs for Section 80C.
Conclusion:
Monitor your investments, stay updated about the market trends and go for a mix of short-term and long-term investments. The surplus returns from short-term investments can be invested in the long-term schemes to add to your future income. Invest in more than one scheme or plan to get assured returns after the maturity period. Starting at the age of 30 or 35 will help you plan your investment until you reach the retirement age of 60 years. It is advisable to ensure that you will have additional corpus after retirement. Unforeseen circumstances can severely affect your finances if you are not prepared for emergencies.
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