Diversify the portfolio while making plans to financially secure life after retirement.
Ripudaman Singh, 41, a professional working in the e-commerce industry, plans to retire at the age of 60. Till about four years back, he was relying solely on his employees’ provident fund (EPF) for retirement savings. Singh got a rude shock when his financial planner told him that he won’t be able to afford his current lifestyle during the sunset years with only the EPF money.
There are many people like Ripudaman who rely only on their provident fund for retirement expenses. EPF is a tax-efficient, long-term investment product but contributions to it are limited — 12 per cent of the basic salary and matching employer contribution. Part of the employer’s contribution (which is 8.3 per cent, generally subject to a maximum of 1,250) goes towards employees’ pension scheme. Frequent withdrawal is also common, which brings down the corpus.
EPF is predominantly a debt instrument. It was allowed to invest in equity only recently, and the exposure is limited to 15 per cent. It is difficult for a debt-heavy instrument to generate inflation-beating returns.
Asset Allocation
Once you realise that EPF alone will not be enough to meet your retirement needs, you need to start additional investments, whose returns will depend on the asset allocation (see: Final Figure). So, before exploring the instruments, decide on how much you need to invest in equity, debt or any other asset. “Asset allocation can be decided after considering expenses and goals after retirement, risk profile, liquidity, income needs, time to goal, taxation, etc,” says Suresh Sadagopan, Founder, Ladder7 Financial Advisories. If you are not able to ascertain your asset allocation, take the help of an adviser.
Here are a few options you can use for retirement planning.
هذه القصة مأخوذة من طبعة May 5, 2019 من Business Today.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 8500 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة May 5, 2019 من Business Today.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 8500 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
All That Glitters
The price of gold has been rising unabated. It has soared to more than 73,000 per 10 gm in 2024 from *31,000 in early 2018. Is the rally sustainable or is this a bubble?
"Hire for attitude, not ability"
Thryve Digital is a player in the healthcare technology sector delivering next-generation solutions
Road Warrior
For Khalid Wani, Senior Director of Sales at Western Digital India, life is much more than just the corner office. Biking across the world is one way he derives meaning for his life
WIDENING THE POOL
THERE HAS BEEN A JUMP IN INDIVIDUALS INVESTING DIRECTLY IN THE STOCK MARKETS, BUT MUMBAI AND AHMEDABAD STILL ACCOUNT FOR THE LION'S SHARE. THERE DEFINITELY IS SCOPE FOR IMPROVEMENT IN TERMS OF PENETRATION LEVELS ACROSS THE COUNTRY
CRISIS IN THE CLOUDS
INDIAN AVIATION IS IN CRISIS. AIRLINES ARE GRAPPLING WITH FLIGHT CANCELLATIONS, CREW SHORTAGES, AND COMPLAINTS ABOUT POOR SERVICE, ARE BLEEDING DUE TO RISING COSTS WILL THE FASTEST-GROWING AVIATION MARKET RECOVER?
"India should start privatising public sector banks"
Arvind Panagariya, Chairman of the 16th Finance Commission, on growth, inequality, jobs, the banking sector, and more
THE DARK SIDE OF GOLD LOANS
THERE HAS BEEN A SHARP RISE IN GOLD LOANS IN RECENT YEARS. BUT THERE IS A SEEDIER SIDE TO THIS, AS IS EVIDENT FROM THE RED FLAG THE RBI RAISED RECENTLY. WILL THE REGULATOR'S MOVE PROTECT CUSTOMERS?
"I LET MY WORK DO THE TALKING"
Megha Engineering & Infrastructures MD P.V. Krishna Reddy on being low profile, the infra opportunity and much more
"Core of insurance lies in long-term security"
Vibha Padalkar, MD & CEO of HDFC Life, on the insurance provider's performance, surrender charges, and future innovations
Distress in the Books
Bandhan Bank, the brainchild of Chandra Shekhar Ghosh, has made the journey from an MFI to a bank, but with many hurdles. Now with his resignation as MD & CEO, is the lender staring at more uncertainty?