Retirement planning- Get the number right
You don’t have to be a financial wizard to make money out of investing. but knowing the basics around mutual funds and stock markets will help you a lot towards making right decision when it comes to investing.
All of us do need to retire from work at some point of time. If we do not invest your money, you will never be able to create a corpus of money you can rely on, and will never be able to get free from your work unless you are person who says “I love my job. I will work till I die”.
If I do not intelligently invest a considerable portion of what I earn, what would be the outcome with my savings? After x years from now? Not many of us think about inflation Your money will decrease after many years in its purchasing power. What INR 100 can purchase today, it may not purchase the same thing in the future.
The National Pension scheme is a well defined contribution pension system operated by Government of India. It comes with tax benefits but does not allow you to withdraw money till retirement. It is open to anyone between18 to 60. You could also consider maximizing your Employee’s Provident Fund (EPF) contribution. The NPS incurs a very low fund management expense as well.
EPF has consistently returned over 8.5% over the years. Apart from this advantage, starting investments early would ensure you have more number of “investing” years before you retire and the chances of higher returns are generally higher. Having a well-diversified investment portfolio would ensure those extra returns.
So, imagine you retire at 60 and live till 85. You ought to be able to guess how much you need for these 25 years. So it is better to estimate your number now and start working towards it. By the time you are hit 40, you should be well on your way to achieving this figure.
Planning for this number early will let you spend those last few years in peace.So go ahead, start building that solid financial foundation before you hit 40.
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