Hello Readers!
“Retirement” is a word that comes with a feeling of being relaxed. Every individual struggles a lot, during their working period in order to give a good life to their family members, struggles a lot to complete their expenses and investment, and after they get retired, they look for a relaxed life.
To carry their expenses after retirement people do invest, during their work time, but here the question arises, “do your money saved for retirement is enough to carry your after-retirement expenses?” You need to be sure whether the corpus acquired is enough to lead you a comfortable retired life.
Well, reaching your retirement, doesn’t assure any individual that now there is no need for investment, in fact, every individual should have some post-retirement strategies. When people plan to invest after their retirement, are much cautious towards their investment as, in this stage of their life they restrict themselves from taking any risk, at the same time the cost of making mistakes is higher in retirement, as there is low chance to bounce back and cover the loss. Thus, it is always important, to plan your post-retirement investment in a perfect way with perfect strategies. Here I am listing some of the tips that can be used while planning your Post-retirement Investment, read to know about them:
Don’t Play Too Safe
Till people reach their retirement, they incur a habit of protecting, and thus they try their best to protect their retirement fund, they have acquired during their working period and to do that they often invest their corpus in safe options. Their only aim of investing is to protect their principal, for them, neither risk is an option, nor they look towards investment options that give good returns.
Investors think that after investing their corpus, in safe options, they will be able to protect their principal, but they often miss the fact “of increasing inflation”, that slowly erodes their built corpus with time. Thus, rather being too safe with your post-retirement investment, its better to have some Equity exposure in your investment, that is investing a part of your corpus in Equity Mutual funds, would be more effective, as it will help in earning returns with the benefit of beating inflation.
Being Adventurous Is Not Recommended
People at their young age are quick risk-takers, as they have energy and source to bounce back, but when they retire, they lose the ability to bounce back as they no longer have a source of regular income even if they are getting pension that is not equivalent to what salary they were receiving earlier, thus taking risk and investing whatever income source or built corpus they have is not at all advised. In investment there is a rule “higher the risk, higher the gain”, just remember the risk is higher thus, having too much equity implies too much risk, and market correction has its impact on your investments, hence with little time in your hands, to earn good benefits, you need to have a perfect diversification of your assets. When you plan your investment after retirement, structure your investment portfolio that is well-diversified across different asset classes and products, also ensure that you are not too much exposed to Equity Mutual funds and try to strike a balance between equity and debt funds.
Have A Cushion
Having a regular income during your retirement is good but, it is not the same with every individual. Every individual does not get a pension after they retire, so how will they carry their expense, with the ever-increasing inflation, after their retirement? It is always advised to investors to have a cushion, that helps to protect their income during bad market conditions. This cushion can be in the form of cash in hands, that is equal to three to five-year expenses, having a cushion for your income, also restricts you from not liquidating your investments, at their lowest value.
This cushion income that is required for your immediate consumption should be in liquid funds or low risk high volatile instruments so that you can easily take them out anytime.
Continue to Have an Emergency Fund
Well, the Emergency fund is the most prominent demand of your financial planning whether you are a working man or retired person, the only difference is now this fund should be bigger than before. The need for an emergency fund increases with age, as the chances of your illness increases, so basically increase the amount of your emergency fund, invest it at a place where you can access them anytime, and be prepared for emergencies. Your emergency fund during retirement works as a cushion for your unexpected expenses.
As of now, you must have understood the investment strategies that one should follow, in the duration of their post-retirement investments.
Most importantly always, consult a financial advisor, before planning your investments at any stage of your life. They guide you with your investments in the best way possible.
You can also 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).