Retirement Planning: If you have crossed 50 years of age and have not yet created a retirement fund, then why are you stuck in FD, when you have the opportunity to earn double the returns annually. Even after retirement, you can make big money with strong returns.
New Delhi. Most investors believe that investing in the stock market and equity is the job of the youth. Elderly people and investors who have crossed 50 should invest money only in traditional options like FD, Recurring and NSC. When we talked to investment experts on this, they gave many important information. This makes it clear whether elderly and near-retirement investors should also turn to the stock market and equities.
Balwant Jain, an expert in investment and tax matters, says that older investors should come out of this belief. They also have a chance to earn better returns from their funds. I believe that equity is the only option that provides enough funds to enjoy retirement comfortably. Whatever return you get in options like FD, it will be negative after tax is deducted. Its returns remain around the inflation rate.
Why is equity option right?
Balwant Jain says that for those who have crossed 50 years of age and have not yet created a fund for retirement, then equity is the only option which will help you in raising funds quickly. By the time you complete 50 years, you would have been freed from most of the responsibilities and would have also paid off the loan etc. In such a situation, you can adopt an aggressive investment strategy and get tremendous returns by taking little risk on your money. Yes, keep in mind that instead of investing directly in the market, invest every month through SIP, because it will be easier for you when you get salary every month.
Why there will be no risk on investment
In fact, even people who have crossed 50 years have 10 years time till retirement and if you have invested in equity for more than 7 years, then your money will never be lost and you will not suffer any loss. Equity is the only way through which you can accumulate money as you approach retirement. Not only this, you will also get returns of more than 12 percent in a period of more than 10 years.
What should be the strategy after retirement?
- Never invest money directly in the stock market, invest only through funds.
- A retired person should make a bucket strategy for investing in equity.
- You need expenses for at least 20 years after retirement.
- In such a situation, put the amount worth 3 years’ expenses in a liquid fund or one-year FD.
- Put the money meant for expenses of 4 to 10 years in a hybrid fund, where there is less risk.
- Invest the funds that can be used after 10 years in equity through mutual funds.
- Keep changing this investment over time. If 3 years fund is left then convert it in 10 years. Do the 10th one in 20 years.
- If you do not want to take much risk then invest in index funds. There will be no need to wrestle with this.
Get double benefit
Balwant Jain says that investing money in mutual fund equity instead of options like FD gives double benefit. Firstly, here you will get at least 12 percent return in the long term. Other taxes will also be saved. While tax has to be paid on FD as per the slab, returns on equity are free up to Rs 1 lakh. On the amount above this, income tax has to be paid at the rate of only 10 percent in the long term.
