3 minutes of reading
January 1, 2024
Planning for a smooth, stress-free retirement experience is probably at the top of your list of financial goals. So how do you do it in an organized way?
A combination of planning and affirmative action is necessary. For example, you can optimize spending, create an emergency fund, open a PPF account and start systematic investments in mutual funds.
However, one of the key challenges is making your retirement fund last a lifetime, so you and your family can enjoy peace of mind in your golden years. Here is a strategy that will help you achieve these goals.
Identify the retirement age and the value of the corpus.
The first step is to estimate at what age you intend to retire. Consequently, you can design a plan that aligns with this aspiration. For example, if your goal is to retire at age 65 and you plan to live until age 90, your retirement corpus should last 35 years. On the other hand, if you retire at age 55, this means it will have to last for 45 years.
Calculate the value of your retirement corpus
The next step is to calculate the ideal value of your retirement corpus. You can take advantage of a retirement calculator to do the math. Enter values โโlike your life expectancy, current age, monthly expenses figure and current value of retirement corpus, to get an estimate of how much you need to save. Once you have access to this figure, the next step is to build a sustainable and consistent investment plan.
Balance risk with profitability
When creating an investment portfolio, you need to keep it diversified and balance risks with returns. Below is an example of how to achieve a balance. For example, investing directly in the stock market has the potential to generate significant returns over time. However, investing in the stock market carries greater risks if you are not a smart investor.
Instead, consider opting for a stock-based system. Investment fund investment. This instrument comes with a designated relationship manager who capitalizes on market opportunities while making strategic changes in a volatile market.
Read also :Who should opt for mutual funds?
Main investment opportunities
It is important to have a clear understanding of the different investment strategies available to you. Below is a brief overview of some of the most popular investment strategies you may want to consider:
Launch a SIP Mutual Fund
Investing in mutual funds is a simplified and time-tested way to build your retirement corpus while managing risks. Be sure to check the mutual fund's performance history over a period of three to five years and the expense ratio, and make an informed decision.
You could start a mutual fund SIP Investments with just a few clicks through Axis Bank's mobile and internet banking services. Choose from a range of equity, debt, hybrid, liquid, solutions-oriented and index funds, depending on your risk appetite and return requirements.
Open a PPF account
Even if you already have an Employees Provident Fund Organization (EPFO) account, it is advisable to open a PPF account. You can invest up to Rs 1.5 lakh per year for 15 years. You can get a tax deduction under Section 80 of the Income Tax Act, 1960, and the principal and compound interest is 7.1%.
However, the most attractive feature is that PPF falls under the category of "exempt exempt" investments, where the principal amount and interest are not subject to tax. You can today open a PPF account with Axis Bank digitally in a matter of minutes.
Read also :Tips to Earn Maximum Interest on PPF
Additional strategies
While your investment portfolio is getting started, you can also activate some additional strategies.
- Create a monthly budget and track your spending, so you don't spend too much and be forced to dig deeper into your investment budget.
- Get a part-time job or start a side hustle to supplement your income and increase investments.
In conclusion
Retirement planning requires consistency and a systematic approach. You can take advantage of the SIP feature to automate investments and reduce pressure on your finances while building your retirement corpus much faster. Investing in MF is a relatively simple process and can be done online. By starting an SIP, you can automate investments and develop a savings habit. Enjoy your retirement in peace and holiness.
Disclaimer: This article is for informational purposes only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct or indirect loss or liability incurred by the reader in making financial decisions based on the content and information. Consult your financial advisor before making any financial decisions.
Mutual fund investments are subject to market risk; Please read all documents related to the plan carefully. Axis Bank Ltd acts as AMFI registered MF dealer (ARN code: ARN-0019). Customer's purchase of mutual funds from Axis Bank is purely voluntary and is not linked to availing any other services of the Bank. *Terms and conditions apply
