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Financial Planning
Navigating the retirement roadmap: The three essential stages
Any talk about the future is bound to bring up concerns about retirement and life without a salary or income. Ideally, the sunset years of your life should be leisurely, given how hard you have worked all your life. But to do so with peace of mind, you need to understand the retirement roadmap. Here, we outline three crucial stages that can make your golden years truly golden.
Understanding the basics of retirement planning
Retirement planning is not just about saving money. It's about ensuring that you can maintain your lifestyle and handle unexpected expenses even when regular paychecks stop coming in.
- Start early: The sooner you begin, the more you benefit from the magic of compound interest. An early start allows you to make modest contributions that grow significantly over time.
- Assess your needs: A retirement calculator can be beneficial here. Assessing your current expenses, future inflation rates, and the number of years you expect to live post-retirement gives you a precise estimate of the corpus you need to accumulate.
- Choose diverse investment avenues: A blend of investments like Fixed Deposits, Equity, Hybrid and Debt Mutual Funds, NPS and Public Provident Fund can help you achieve your retirement goals.
Investment options for a secure retirement
At the heart of retirement planning is investment. It's not just about saving; it's about growing your money.
- Fixed Deposits (FDs): A time-tested favourite for many, FDs stand out due to their reliability and straight forward approach. With your money locked in for a specific period, FDs ensure your funds aren’t susceptible to market fluctuations. The convenience of selecting tenures that match your goals and the assurance of getting both your principal and interest at maturity make FDs a cornerstone for retirement planning. Discover the comprehensive benefits and attractive rates offered by Axis Bank here.
Also Read : Five smart investment avenues to plan your retirement
- Systematic Investment Plans (SIPs): As an antidote to market unpredictability, SIPs offer the advantage of rupee cost averaging. By allowing investors to allocate a fixed sum into Mutual Funds regularly, it negates the need to time the market. Over time, this discipline not only accumulates wealth but also mitigates risks associated with the market volatility. For those beginning their investment journey or those with a moderate risk appetite, SIPs can serve as a strategic tool to build a substantial corpus.
- Retirement-Centric : Beyond the traditional mutual funds lie schemes tailored for retirement. These funds, structured with a long-term horizon in mind, balance the scales of growth and safety. By gradually shifting from equity-heavy portfolios in the early years to debt-centric ones as the investor nears retirement. These funds ensure optimum returns with reduced risks. Their design to cater specifically to post-retirement needs makes them a compelling choice for those focusing on this life phase.
- Government Schemes or Small Savings Schemes: Programmes like the National Pension System (NPS) or the Senior Citizens' Savings Scheme (SCSS) come with dual benefits: they offer attractive returns and tax advantages. Particularly for those nearing retirement, schemes like SCSS can be invaluable, offering quarterly interest payouts and ensuring a steady income stream.
- Real Estate: Though not a conventional retirement fund avenue, real estate can act as a hedge against inflation and offer rental income. If chosen wisely, it's an asset that can be appreciated over time, providing both security and returns.
Review and revise: The key for staying on track
The journey to retirement isn't a set-it-and-forget-it plan. As you move through different life stages, your needs and goals might change.
- Regularly check on your investments: The performance of investment avenues like equities can be volatile. Periodically reviewing them ensures that they align with your retirement goals.
- Revise your plan: If there's a significant life event, like buying a new house or a medical emergency, it might impact your retirement corpus. Such circumstances necessitate revisiting your retirement plan.
- Stay updated: Financial products evolve, and so do their offerings. For instance, if FD interest rates become more attractive, it might be beneficial to lock in a more considerable amount in FDs.
The journey to retirement isn't a set-it-and-forget-it plan. As you move through different life stages, your needs and goals might change.
Also Read :Also Read: How to start saving for your retirement
Conclusion
While the thought of retirement might seem distant, your actions today can dictate the comfort of your golden years. Understand the stages of retirement planning, choose your investments wisely, and ensure you review and revise them as needed. With the right steps and tools like those offered by Axis Bank, you're on your way to a retirement as fulfilling as your working years.
Disclaimer: This article is for information purpose 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 / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. *T&C apply
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