Ace your retirement planning with these key tips
26 May 2022
1. Start early
Begin planning for your financial goals as early as possible, particularly retirement planning. Investing money consistently from an early age helps build significant wealth over the years.
| Investor | Current Age | Years to retirement | Monthly SIP | Total Invested Amount | Investment Value at age 60 |
|---|---|---|---|---|---|
| A | 25 | 35 | 10,000 | 42,00,000 | ₹ 6,43,09,595 |
| B | 35 | 25 | 10,000 | 30,00,000 | ₹ 1,87,88,466 |
*Rate of return is assumed at 12%.
As you can see in the above table, investor A who started investing 10 years earlier as compared to investor B accumulated 2.4x more wealth, thus highlighting the importance of starting early
2. Go for investments that effectively counter inflation
For those saving for long-term goals like retirement, it would be imprudent to ignore the brutal impact of inflation on your retirement savings. Historically, Equities as an asset class have demonstrated inflation beating returns as can be seen below.
| Asset | Rate of Return (%) |
|---|---|
| Equity | 12.9 |
| Debt | 6.7 |
| Gold | 5.3 |
*Returns are for a period of 10 years
For comparison, we have considered the BSE Sensex, Gold ETF and Government Securities (gilt).
3. Automate Investments
There are many features offered by banks and mutual funds that make it convenient to Invest a fixed sum on a recurring basis. SIP’s are a great way to automate your investment without worrying about timing the market. Few major benefits are highlighted below:
• Power of Compounding
• Rupee cost averaging
• Investment Discipline
4. Get a Health Insurance cover
One of the most important things the pandemic has taught us is the importance of having Health Insurance. As we grow older, it is more likely that we encounter more health problems. With medical expenses continuously on the rise, any major surgery or treatment can eat up all your life-time savings. Hence it becomes important to have a health insurance which can help you with hospital bills in case of medical emergency.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision. Insurance is a subject matter of solicitation.
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The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
