Hello Readers!
People when they start their careers, they are carefree, they generally do not think about the future and believe in enjoying their today at its full. They use their hard-earned money to fill their life with all the lavish things they ever wanted. They spend their money on trendy gadgets, exotic vacations, and dine-outs.
In the early years, hardly people think about their retirement planning. Their mind hits only when they reach their 40’s or 50’s, that they need to save for their sunset years.
Suppose you spend your 20 years of earning career enjoying all the lavishes, and then suddenly you woke up one day and feel that you haven’t saved enough for retirement, well, that will be a worrying situation. However, it’s never too late, you can still plan and save for your retirement, only you need to follow some money hacks with your financial planning from now. Let us see how these hacks can put you back in control of your financial future.
Analyze Your Financial Position
Analyze how much savings you have done till now, like how much investment do you hold in mutual funds, stocks, FD (Fixed Deposits), and other instruments if any. Take them all out and calculate how much you have saved till now. It will help you analyze your financial position at this juncture. For instance, you might be in your 50s with total savings worth Rs 25 lakh.
Calculate Your Retirement Corpus
Very first fix the age of your retirement whether 60 or 65. A person who is in his 50, going to retire at the age of 60, has 10 years in his hand to build up his retirement corpus. After that analyze your retirement life, how much long-lasting it could be so that you can for that much period. Advancement in science and technology has led to an increase in the average lifespan of humans. So basically, you would have to plan your retirement expenses for around 25-30 years.
Before you calculate your retirement expense for around 25-30 years, first fix what kind of lifestyle you would be living in your retirement days. Will it be a modest daily life or one that will involve a high standard of living? After you analyze all these things, you would easily calculate your retirement corpus. If we go an average, then we can say, one needs to target a retirement kitty of Rs 1.3 crore or more by 2030 for a worry-free retirement.
Reach Your Target
Now you have your corpus calculated, its time to plan your investment to reach there. Here investing in Equity mutual funds via SIP is a better option to create your retirement corpus. Also do not go with static SIP, rather chose Dynamic SIP and go increasing your SIP, per year. This will help you reach your goal fast.
In the above case, a SIP of Rs 25,000 in Equity Mutual fund and increase SIP amount by 8 percent every year, this strategy will get you close to the targeted retirement nest of Rs 1.3 crore in 10 years.
How to Save For A Big SIP Amount?
If your savings per month is not enough for your monthly SIP amount required, then it’s time you need to cut down your unnecessary expenses or boost your income by doing adding extra professional work.
To cut down unnecessary expenses target big things in your budget like housing or transportation. You can relocate to a cheap place near to your office, this will help you save on rent and would also help you save your travel expenses. You can also go using public transport in order to save your transportation costs.
To boost up your income, you can give private tuitions on weekends, or you can give music lessons or dance lessons on weekends. You may also go picking some freelancing projects based on your talent and interest.
Retire Late
In order to catch your retirement corpus, you must elongate your working years a bit more. Like, suppose you were to retire at 60 but now you chose to retire at 65, this means your investment will get more 5 years to compound itself and give wonder returns on your portfolio.
Choose Growth options
People in the race to gain high returns, end at choosing funds that take a higher risk on their portfolio, to generate high returns. Well, it is advised to choose growth as part of your investment strategy that helps you reach your goals faster. Make sure that you give a long time frame for such investments to realize its potential. Always remember, chose funds based on your ability to handle the risk and volatility, this helps you remain stuck with your investment in hard times.
The above strategies and ideas will help you create a good corpus for your retirement even when the investment period is very low. So do not panic, plan your investment, and adopt growth plans with suitable risk, that will help you saving catch up your retirement corpus.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).