Retirement is a stage when one needs finances the most. This is why, financial planning experts always request investors to keep corpus for retirement as one of their high priority long term financial goals. Here are 5 retirement strategies for investors:
Start investing at an early stage in your life
Today’s youth lay emphasis on living in the moment. This also means spending most of the money you earn. Which in turn also means less savings. The reason most young people are able to lead a decent lifestyle is because their parents understood the importance of savings. However, the current mantra for young earners is first spend and then save from what is left. In most cases, there’s hardly anything that is left, and most people do not save or invest. Do bear in mind that you are going to need more money to survive when you grow old than you need in your youth. So, if you are planning to build a retirement corpus using mutual funds, make sure that you start investing early.
Start a SIP in mutual funds
Investing in mutual funds via SIP is a good idea especially if you wish to build a retirement corpus gradually. A systematic investment plan (SIP) might be one of the ideal retirement strategies to build wealth over the long term. If you are a KYC compliant individual, you can even invest in mutual funds via SIP from the comfort of your home or office using a smartphone or laptop with a decent internet connection. Once you complete a onetime mandate with your bank and decide the monthly SIP amount, every month on a fixed date a predetermined amount is debited from your savings account and electronically transferred to the mutual fund. Over the long term, through systematic and disciplinary investments in mutual funds via SIP, you might be able to build a decent retirement corpus.
Start living on a fixed budget
You might be getting a decent fat pay cheque at this moment, but when you retire you will have limited income source. Some employers have provident fund accounts for their employees and if yours do not have one then you will be left with only what you have saved throughout your professional career. Do understand that you have to survive on the accumulated corpus for the next 15 to 20 years at least. So, it is better to start living on a fixed budget. If you get used to living on minimum expenses, then you might not have to worry about money management during your post retirement life.
Invest in solution oriented schemes
If you carry moderately high risk appetite, consider investing in solution oriented schemes like retirement funds. Most retirement funds come with a predetermined lock in period, thus giving investors an opportunity to remain invested till they retire or till their investment objective is achieved. Through systematic investing, one might be able to benefit from power of compounding if they continue investing at regular intervals in solution oriented schemes.
Invest according to your risk appetite
Now it is evident that most of us wish to achieve a 7 figure amount as our retirement corpus, but that doesn’t wish you end up investing beyond your risk appetite. Mutual fund investments do not guarantee returns. Hence, it is essential for investors to understand how much losses they can bear over the short term in anticipation that over the long the term one can accumulate wealth.
These were a few retirement strategies one should bear to target build a decent retirement corpus.