Former Los Angeles Lakers shooting guard Kobe Bryant decided to hang his boots after 20 seasons in the hard-grind world of professional basketball. When asked what he’d do in his retirement years, he said: Ski, surf and skydive.
A plan that can make you go green with envy.
However, if you step back, you’d realise that your pursuit of the thrills of life is not beyond you.
Plan to glow in the sunset years
Retirement doesn’t mean you sit at home and watch time ticking away. Do you recollect watching that old retired couple trotting around the globe in one of those TV ads? Well, that’s what retirement is all about. You can make the most of life during those golden years.
But, while the cheery couple on TV enjoyed an all-expense paid trip, you might have to do things differently. This is due to the simple fact that like all good things in life, a happy retirement lifestyle does not come cheap.
In order to enjoy your retirement, you need to have sufficient amount of money. This is because you won’t be working anymore. But the good news is that it is quite possible to create that lump sum for your future. And the first step of the process is efficient financial planning.
To kick off the proceedings, you need to identify how much you would like to save up for your retirement. These calculations would depend on factors such as your current lifestyle, monthly expenditure and inflation.
Say, you have a long term financial goal of creating a corpus of Rs 1 crore for your retirement days. The ideal way to get there is by putting your money in an investment vehicle such as stocks, bonds or fixed deposits (FDs). The invested money will work work hard for you. It can help your money grow faster. Merely stashing your money in a bank savings account would not fetch you great returns. And even if they do, the invisible force of inflation will eat into your money.
The next step is to choose the right investment vehicle. It all boils down to your risk appetite and long term financial goals. While equity has a reputation of being risky, fixed deposits (FDs) provide relatively low returns. Mutual fund, however, is one option that combines the best of both the worlds. They are considered safer than equity and have the potential to provide higher returns than FDs.
Invest for your future
There are different kinds of mutual funds that cater to different investment goals. But if you want to create a large corpus for the long-term, investing in equity funds is a good idea. You could do this through a systematic investment plan (SIP). In an SIP, you invest a specific amount of money at regular intervals. This could be monthly, quarterly or even yearly. SIPs also offer you the chance to invest in mutual funds with as little as Rs 500.
Equity funds, over the long-term, have the potential to offer higher returns compared to other traditional retirement options. So, if you were to invest Rs 5,000 every month in an equity mutual fund at 12.5% rate of interest, you would earn a lump sum of Rs 1.03 crore at the end of 25 years.
In addition to equity funds, you could also consider in retirement income funds in order to earn a steady monthly income during your retirement.
Therefore, a carefully curated financial plan can help you lead a seamless retirement life. So, start investing now to reap a rich harvest when you need it.