The senior citizens are in dilemma when things changes suddenly in their life. There will be no more monthly salary to earn and no more daily office going. Some expenses related to lifestyle will decrease, while others like medical and wellness related expenses are expected to rise. The senior citizens are sitting on huge retirement corpus with a question of how to find a proper investment plan to serve the corpus for a lifetime.
Retirement Strategy – What to Ensure?
Senior Citizens should always ensure SSS: Safety of Principal, Steady Income and Spare fund for an emergency.
Safety of Principal
You have done hard work for about 30 to 35 years in your work-life. Now it is time to enjoy fruits of hard work. It is not recommended to put your all money in the equity market or risky credit lending. You must ensure major chunk of your principal amount is always in safe hand. You can use government schemes like Senior Citizen Savings Scheme, Pradhan Mantri Vay Vandna Yojna and AAA rated senior citizen Fixed Deposit by Bajaj Finance for this purpose.
Since income from your retirement corpus is most reliable and primary earning option, you cannot afford fluctuation in income every month. You must know well in advance; how much money you are going to earn every month. Hence, you should minimize your investment into equity or equity-related mutual fund, especially if you have very limited investment amount. Investment options in government schemes and FDs are the better choice for this purpose.
Spare Fund for Emergency
We all know that our car has a Fifth wheel as the spare wheel, which keeps our car moving in an emergency. The four regular wheels cannot serve the purpose for an emergency. In the same way, the fund you have parked for regular monthly income should continue to do its mandated job. Even in case of emergency, these funds should not be accessed. This is only possible if you have prepared your strategy well. You must create a special emergency fund in the form of Fixed Deposit.
Retirement Strategy: Things to Avoid
Some obvious “Don’ts” will save senior citizens from any undesired financial distress.
Avoid Lower Grade Investment
Never invest in lower grade Fixed Deposit, even if you are offered higher interest. If such investment sinks, you will lose your lifetime savings. Minimum acceptable investment grade must be AAA by CRISIL.
Avoid Investing Everything in Monthly Income
This will prevent you further savings from your interest income; hence, over the years, your portfolio may not be enough to fight inflation. In addition, in case of emergency, you have to break the investment, which is meant for monthly income. Hence, it is better to invest some portion of your money into the cumulative deposit for an emergency, and the rest of the fund will continue to earn regular income.
Avoid Investing Everything in Cumulative Deposit
If you invest too much fund in a cumulative corpus, you may feel shortages in your day-to-day expenses. Keeping the balance between regular income and cumulative growth is an essential strategy in retirement planning. Bajaj Finance can offer you Fixed deposit with cumulative as well as a non-cumulative option. You can use these options to your advantage. Online FD calculator can also come to your help to strategize investment for monthly income and cumulative growth.