Home Add to Favorite Contact Submit  
             31 October, 2020
 

    
Category:  Articles » Finances » Investing

 

Retirement Planning with Systematic Investment Plan (SIP)

Popularity:
         Views: 1395
2011-04-02 02:20:29     
Article by Jiten Sukhrani

The year was 1985. A joint family of 10 people (two brothers, their wives and kids along with their parents) was living happily with limited means. It was a period of closed economy, limited access to global products and aspirations were limited. It was a period of joint family with lower expenses and higher savings.

In 2011 we are talking about nuclear family, children staying away from parents due to higher studies and employment opportunities, increased cost of medicine due to advancement of medical science and more stressful life. Parents retiring today are more dependent on their own savings to live through their retired life than getting dependent on their kids. Imagine if this is the scene today, how would be our retired life 15-20 years down the line.

This creates a scary picture in front of us today. To turn your retirement the best period of your life by living for yourself and do everything that you have not been able to do during your working life or to make your retirement a painful nightmare depends on how you plan for it in early years of life.

The common point is money looses its value over a period of time. A rupee value tomorrow will be lower than rupee value today, courtesy monster called inflation. So inflation becomes the single most important factor to plan for retirement.

Now you may argue that one can cut down on his/her expenses during retirement life, but this is easier said than done. Imagine can you travel by a public transport once you retire when for whole of your life you have commuted in your personal car. Can you move to one BHK apartment in suburb when for your entire working life you have stayed in a three BHK apartment, at the center of the city? So rather then putting yourself in a situation where you have to cut down on your expenses it is better to plan for your retirement.

Medical Bills:

Medical cost has become the single most important component of monthly expense during retirement period. With growth in the economy and advancement of medical facilities this cost is only likely to go up with every passing year. Changing lifestyle is also affecting our health. Our previous generations used to walk few kilometers in a day while today we use vehicle even if we want to go to near by grocery shop. Private sector hospitals are coming up with latest but expensive medical facilities. This will surely add to our medical bills going forward.

Life Expectancy:

With better quality of life and medical facilities, life expectancy of average Indian has gone up to 80 years. So if one is retiring at the age of 55 he/she has another 25 years to survive during his/her retired life. This is almost equivalent to his/her working life. This increases importance and requirement of proper retirement planning.

No government Support:

Unlike the US and UK where they have government supported retirement benefit scheme and state pension respectively as social security benefit during retirement, the government of India does not provide such benefits. So again you are on your own.

Its only few government employees and selected private sector employees who get pension after retirement, leaving majority of workforce on their own.

Approach towards building retirement corpus:

The basic things to remember is start as early as possible and invest in right asset class. The biggest advantage of starting early in power of compounding.

For e.g. Mr. X and Mr. Y both want to retire at 55 years of age. Mr. X starts investing when he is 25 years of age. So he has 30 years to build his retirement corpus. Even if he invests only Rs.5000 p.m. in equity mutual fund that gives him 15% return p.a. his money can grow to Rs.2.82 cr at the end of 30th year.

Mr. Y starts investing when he reaches 40 years of age. So he has 15 years to build his corpus. He starts with monthly investment of Rs. 10000 in equity fund on which he earns 15% return. Even though his investment value is four times higher than Mr. X his end value would be only Rs.62 lakhs. This shows the power of compounding.

Conclusion:

For every one of us a ten-letter word ‘retirement’ brings images of sitting in the garden of your house with your life partner, playing with your grandchildren while reading morning newspaper. Taking your wife to the vacation on a foreign location every year. To make this reality, one requires proper planning for his/her retirement. Retirement planning will change your mindset from ‘ I want a happy retired life’ to ‘ I will have a happy retired life’.

Specialized in: Sip Mutual Fund - Retirement Planning
URL: http://www.njfundz.com/sip.php
Print article      Bookmark this page
Related Articles 
Share Market Tips Provider (Popularity: ): Share market has now gain a huge status nowadays and growing on day by day. It was started some around 12th century in France. The reason for launching of this market was increased debt in the agricultural community. This market was brought into existence to manage all the debts. This was done with the help of banks and the people who are known as the brokers. And now the development ...
Equity Tips By CapitalHeight (Popularity: ): Equity Tips provided by Stock Advisory Company are the work of research and experience of Stock Market. In this section of market the companies provide Tips related to Capital Market both on Intraday and Delivery basis. The Tips are provided by using various methods, software, Charts and many more, and through these methods they evaluate various tips such as stock tips, commodity tips, equity tips, mcx tips, ncdex tips etc.Stock ...
Public Relations Services Can Help Penny Stocks Company Receive Greater Coverage (Popularity: ): Many questions need to be answered when you think of hiring public relations services from a third party company to manage your media and public relations, assist with promotion and advertising as well as boost company marketing efforts. Here is a list of questions you should ask to define your needs to opt for an investor relations firm. 1) Do you get PR as per your capability? 2) How is ...
A Guide to Getting the Best Stocks Hints List (Popularity: ): There are lots of stocks hints lists on the market guaranteeing your financial independence through doing exactly what they say, but common sense tells us better. Truthfully, however, there are still a handful of lists which are more than worth their purchase prices and are capable of delivering smart sound stock picks right to you. Let's take a look at the top three things to look for in the best ...
If You are Thinking of Buying Penny Stocks, Here are a Few Things You Should Know (Popularity: ): Perhaps you are new to the idea of buying stacks and shares, have a few extra dollars, and are looking to see how to make your money grow. The price of shares for companies like Microsoft is too high for your budget, so what can you invest in?Penny stocks could be what you want. They are cheap shares, sold at between $1 and $5. You won’t find them listed in ...


Related Business 
Retirement Planning (Popularity: ): The ultimate retirement planning resource. Find out how to plan for retirement comprehensively. Learn to calculate retirement needs, get tips on saving for retirement, and how to allocate your assets properly. Get in touch with a qualified financial advisor who can help you plan your retirement for free.
Michigan Retirement Specialists (Popularity: ): Michigan Retirement Specialists provides an educational approach to pre-retirement planning. We offer Estate Planning, Tax Planning, Annuities, Long-Term Care, & Post-Retirement Strategies, also educate advice, plan and manage to help our clients achieve peace-of-mind as they undergo the retirement planning process
Teacher Retirement Plan (Popularity: ): As a teacher there may be many ways in which you can plan for your financial retirement. The first step in making the right moves is to create a concrete teacher retirement plan of action that you can follow as a family. Many people focus too much on the now or too much on the later and find it very difficult when it comes to having a happy medium for ...
Senior Resource Advisors (Popularity: ): With all the various retirement plan choices that are available today, everyone must be very careful about selecting the most suitable retirement plan for themselves. Valerie further developed her financial skills by earning dual certifications as an Annuity Specialist and a Long Term Care Counselor. She has helped hundreds of seniors with their retirement planning, including Baby Boomers, and is committed to building client relationships through honesty and integrity.
Powerful Free Online Retirement (Popularity: ): Powerful Free Online Retirement planning isn’t something most people consider fun, but it is a necessary task, especially with the uncertainty surrounding the future of Social Security. You think about your retirement goals – how you envision your retirement, the proper time when you want to retire, and how you expect the fund your retirement. You can plan everything with the help of hmsafe.com.
NewRetirement - Retirement Plan (Popularity: ): NewRetirement provides retirement planning help with pension plans: 401k; IRA, lifetime annuities, and social security. Service includes a free retirement calculator, reverse mortgage calculator, and calculators for social security & annuities. Guidance on reverse mortgages, refinancing, life settlements, debt consolidation, downsizing, and retirement planning is provided through retirement financial information services.
mPower.com (Popularity: ): Provider of investment advice and retirement education for 401k/retirement plan participants.
Finance Logix (Popularity: ): Offers financial calculation software for investment professionals and financial advisors, featuring retirement planning, education planning, estate planning, and investment analysis.
Prosperity Financial Group, Inc. (Popularity: ): Prosperity Financial Group is a boutique wealth advisory firm that helps business owners and individuals in the California Bay Area build and manage their wealth. We offer comprehensive wealth management services, including financial planning, retirement planning, investment management, and corporate retirement plan management and administration. At the heart of our Fingerprint Financial Planning process is the recognition that everyone has a unique definition of success. We make a commitment to ...
Cornerstone Investment Services (Popularity: ): Firm offers financial planning and retirement planning for investors looking for personalized investment advice. Based in Providence, RI.