Retirement Planning: If you want to secure your future, then it would be wise to start preparing for it along with your job. Invest in some such schemes from where you can add big money till your retirement. But first you should calculate how much money you have to add for old age.
Keep this in mind while adding money
In fact, just as inflation is increasing with time, your need for money is also increasing. In such a situation, it is very important for you to understand that the amount you consider sufficient today, will it be sufficient in your old age? Today when we talk about Rs 1 crore, it seems like a huge amount to us, but after a few years from now its value will not be much. Keeping this in mind, you will have to add this much money.
Rule of 70 will be helpful
Rule of 70 will help you for this. This tells in how much time the value of your deposited capital will be halved. For this you should know about the current inflation rate. When you divide the current inflation rate by 70, the number that comes out will tell you in how many years the value of your total accumulated capital will reduce to half.
Understand with example
Understand with example- Suppose that at present the inflation rate is 6 percent. In such a situation, apply the formula and divide 70 by 6. 70/6 = 11.66 i.e. the value of your savings will be halved in about eleven and a half years. Meaning, if today you need one crore rupees to live a good life, then after about eleven and a half years from now you will need two crore rupees to live a good life because then the value of one crore rupees will be equal to Rs 50 lakh.
Remember this while investing
In this way, you can estimate the minimum amount of capital you will need to live a better life in old age. You will have to invest accordingly. Also invest in a place where you can get interest at double the inflation rate. With this you will be able to create wealth faster.
Take care of schemes with compounding interest
Invest in those places where you get the benefit of compounding interest. Compounding has the ability to convert investments into wealth. The longer you invest, the more you can benefit from compounding. For wealth creation, you should invest as much as possible in schemes that provide compounding benefits like PPF, NPS, SIP etc. Apart from this, employed people can also increase their investment in EPF through VPF and through this they can add a good retirement fund.
