Retirement planning is an essential task. Especially in countries like India where we don’t have any social or financial security scheme by government.
Rising Inflation number, slow economic growth & mis-selling of financial products make this task even more complex and challenging.
In this article, we will discuss about 7 must financial products for retirement planning.
Equities
Equity is one of the best financial products in terms of returns. Probably none of the financial instrument can match it. You must invest in good stock for retirement point of view.
Select stock from long term perspective at least 10 year or more and keep your emotion under control during upward and downward movement of market.
If your stock is not performing well you may review and switch over to another good stock. If you are not good at selecting good stock invest in stock market through Mutual funds route.
Real Estate
Real estate is another product from retirement perspective. Historically real estate has given good return & it is expected to give good return in future also.
Gold ETF
Gold EFT is another financial product where you must park your money for retirement. Gold is good hedge against inflation. In Gold ETF you can purchase gold unit every month rather than buying gold in bulk. This will give you benefit of cost averaging
NPS
NPS or New pension scheme is good financial product for retirement planning. NPS can give return up to 10%. This scheme is mandatory for government employees.
NPS provide benefit of both equity and debt. This scheme provide flexibility to investor, here investor can select how much percentage of corpus goes to equity and debt. Investment in NPS also provides you tax benefit and yes as this scheme is run by government it is secure form of investment.
EPF or PPF
EPF & PPF is the most popular retirement saving option India. On and average it gives return from 8-9%. This investment option is tax friendly as it gives deduction benefit under 80C. Accumulated interest is also tax-free. These products also give benefit of guaranteed return and power of compounding.
EPF is by default investment for majority of people who are doing job but those who are self-employed or doing business they must select PPF from retirement prospective.
Fixed Deposit
Fixed deposit is one of the most popular investment options in India. Fixed deposit gives fixed return. This option is suitable if you have reached to age 40+ and don’t want to take high risk.
Fixed deposit can give you returns from 8%-9.5%.
Bonds
Bond is type of loan taken by company or government. Bond gives interest in range of 10-12%. Investment duration for majority of bond is 10 to 15 years. Do check the ratings of bond before investing in them.
You must start investing money for retirement as early as possible. Don’t invest in financial product which you don’t understand (when in doubt find out). Never park your all money in single financial instrument. Take help from financial experts whenever required.
