Build a Formidable Retirement Portfolio to Aid Your Future

 

Build a Formidable Retirement Portfolio to Aid Your Future

It is rightly said by George Foreman “The Question Isn’t at What Age I Want to Retire, It’s at What Income.”

What comes to our mind immediately, when we hear the word Retirement? Relaxation, Seven Days Weekend, Long Holidays with your partner and family?

A happy retirement is no longer about sitting and watching the rest of the world speed by. Retirement is all about starting on your life’s greatest adventures. Today, people think of retirement as the time when they can finally put their feet up and enjoy life without any stress or responsibilities.

However, if you have not planned your finances to lead a comfortable life post-retirement, the promise of golden years can quickly fade away. Thankfully, there are a few golden rules that can help. Here we have enlisted such rules for getting your retirement planning on track:

1.  Start Early:

When it comes to retirement planning, we often say that it’s too early to start my retirement planning, please see the illustration below for better understanding.

 Suppose there are two friends Mr A & Mr B.

Particulars	Mr. A	Mr. B
Starts investment at age	30	35
Investment Amount (Monthly)	10,000	10,000
Investment Period	30	25
Rate of Return	12%	12%
Retirement Age	60	60
Total Investment Made	3,600,000	3,000,000
Corpus Accumulated	35,299,138	18,976,351

Hence, Just delay of 5 years has cost Mr B almost half the retirement corpus. At the age of 60, Mr A has Rs. 3.52 Crore; whereas Mr B has 1.89 Cr. So it’s advisable to start early as the cost of delaying by just 5 years is very high.

 2.  Inflation:

Inflation is a silent enemy which erodes your capital and reduces the purchasing power of money every year. Inflation is divided into two parts the general rise in the prices of goods consumed and the lifestyle inflation.

1.    General Rise of Prices of Goods consumed is a type of Inflation which cannot be controlled by an individual and everyone is affected by it.

2.    Life Style Inflation is something that can be controlled by an individual by controlling the Expenses on leisure and entertainment, unnecessary buying of goods not required and so on.

When investing see to it that your investment is generating returns which should be higher than the inflation or else your the money will not grow.

 3.  Allocate a Fixed Percentage of your Income towards Retirement Corpus:

One has to be very clear with Retirement goals. As in Mr A who started his retirement planning at the age of 25 and allocated Rs. 10,000/- per month towards his retirement goal to reach out to his retirement corpus of Rs. 3.5Crores. One has regularly and systematically invested certain % of his/her income towards his retirement planning goal.

 4.     Increase the Investment with an increase in income:

Now that Mr A has set Rs. 10,000/ per month towards his retirement goals but he should also be considering an increase in monthly investment as and when his income increases because of promotions or change in job. It’s very important to step up your investment as your income increases as this will help you to reach out to your financial goals before the time and you can also think of early retirement.

 Suppose we start a SIP of Rs. 10,000/- for retirement that is 20 years

	Normal SIP
Investment Amount (Monthly)	10,000
Rate of Return	12%
Investment Period	30
Total Investment	36,00,000/-
Retirement corpus required	3,50,00,000/-

 

Similarly, suppose we start a SIP of 10,000/- and increase it by 10% every year.

Year	Total SIP (Monthly	Every Year Increase	Total Investment for the year	Corpus Value
1	10,000	-	120,000	128,093
2	11,000	1,000	132,000	285,241
3	12,100	1,100	145,200	476,410
4	13,310	1,210	159,720	707,323
5	14,641	1,331	175,692	984,570
6	16,105	1,464	193,261	1,315,734
7	17,716	1,611	212,587	1,709,527
8	19,487	1,772	233,846	2,175,956
9	21,436	1,949	257,231	2,726,501
10	23,579	2,144	282,954	3,374,326
11	25,937	2,358	311,249	4,134,516
12	28,531	2,594	342,374	5,024,342
13	31,384	2,853	376,611	6,063,565
14	34,523	3,138	414,273	7,274,790
15	37,975	3,452	455,700	8,683,849
16	41,772	3,797	501,270	10,320,256
17	45,950	4,177	551,397	12,217,708
18	50,545	4,595	606,536	14,414,663
19	55,599	5,054	667,190	16,954,991
20	61,159	5,560	733,909	19,888,715
21	67,275	6,116	807,300	23,272,850
22	74,002	6,727	888,030	27,172,352
23	81,403	7,400	976,833	31,661,201
24	89,543	8,140	1,074,516	36,823,620
Total			7,680,300	36,823,620

One of the greatest rewards of a life lived well is the peace of mind in your golden years. So, now that you are aware of these golden rules, start planning and investing towards your retirement goal so that you can be independent and you don’t have to depend on anyone for your financial needs during the post-retirement phase of life wherein you will have very LESS INCOME or NO INCOME.

Plan today for a happy retirement.

Dream - Plan - Invest - Enjoy