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Retirement Plans In India Research Team | Posted On Monday, July 27,2009, 10:07 AM

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Retirement Plans In India



Retirement Plans In India

There are a number of investment avenues in the market for you to choose from. You can prefer the scheme according to your income, risk taking capacity, investment tenure, etc. Age is an important factor in determining the investment that suits you because generally income and responsibilities will change along with age. There are more than 1000 products in the country including Fixed Deposits, Insurance, Mutual Fund and other fixed income instruments. If the number of choice is more possibility of getting confused is also more. So choosing the best one among these is really a difficult task. Now the problem is that, how to find the best investment, who will guide you in this, how much you should invest, when should you invest, etc. if you are approaching some sales people possibility of getting misguided is more. Here comes the importance of As we are only into advising we can provide you complete financial solutions for all your problems without any bias.

In this article we will introduce you some of the investments that best suits for a parent. As we mentioned earlier investment preference will change according to the stages of life (age). Investments in aggressive stocks are suitable for people ranging from 24 – 30 years. But it won’t suit for a parent whose age is more than 40. Because a parent has more responsibility, he has to take care of his family, children’s education, daughter’s marriage, medical expenses of parents, etc. So comparatively less risky investments with good returns will suit him.

Retirement And Investment Plan In India

Following are five major investments suitable for a parent;

Children Education Planning

You should go about planning for your child’s future because education makes a man perfect. Every parent will have the objective of providing quality education for their children. But in today’s condition it is very difficult to provide quality education without having proper money back up. You need to save good amount of money for this purpose. Avenues like equities, mutual funds, fixed income instruments and insurance products all offer financial planning for your child’s education. In olden days education and marriage were affordable and your investments in PPF (Public Provident Fund), NSC (National Savings Certificate) and fixed deposits (FDs) earned you a good enough rate of return. But now the scenario is different you should invest in more productive investments to take care of the expenses

See Also: 10 Rules For Planning Your Childs Future

Retirement Plan

Retirement can be the best period in your life with all the time in the world to live all your dreams and do the things, which you always wanted to do but couldn't due to lack of time and your busy schedule prior to your retirement. Today, individuals have realized the need to provide for themselves during their retirement years. It is very important to invest early so that you can have the required financial backup and get the advantage of investments that grow and multiply every year, which would give you the added advantage in the future. You need a retirement plan through which you would continue to earn a fulfilling income and enjoy a comfortable lifestyle post retirement

Fixed Deposit

A Fixed Deposit also known as a Term Deposit is an account which allows us to deposit money for a fixed time period thereby earning you a higher rate of interest in return. Fixed deposits also give you a higher rate of interest than a savings bank account. When the deposit period elapses, the depositors get interest on the amount deposited. The fixed deposit interest rates can be as high as 7% or more it changes according to the RBI regulation. Just deposit your savings at a bank of your choice and watch your money grow over time also look through the wide range of Fixed Deposit options offered by different banks and select the one that suits your needs the most. Following are the benefits of Fixed Deposit;
  • The option to withdraw the deposit at any time before maturity
  • You can gain loans upto 85% of the principal
  • Variable deposit periods ranging from 15 days to 10 years
  • You get fixed rate of interest on your deposits
  • No risk of capital loss

Debt Mutual Funds

A Debt Mutual fund is a type of mutual fund that is planned especially for the low risk investor whose main aim is capital protection coupled with decent returns on investment. These are for investors who prefer funds with lesser volatility, who want a regular income and are willing to take little or very limited risk. All mutual funds have some quantity of risk, but debt mutual funds are less risky than equity oriented mutual funds. Debt funds generally invest in fixed income instruments that may also offer capital appreciation. Debt funds can give you ‘Capital Appreciation’ and ‘Regular Income’.

Debt funds are specifically planned for the shareholders who are not ready to take risks that come with equity mutual funds. But at the same time wants a better return than bank deposits. You can have limited contact to these funds to add a balance to your portfolio. An ideal investment portfolio would have around 10-15% exposure to these instruments.

See Also: Everything You Need To Know About Mutual Funds

Public Provident Fund

Public Provident Fund (PPF) is an investment cum tax saving instrument. The biggest advantage of PPF is that it works as a retirement planning tool for the people those who do not have any structured pension plan covering them. The balances in PPF account cannot be attached by any authority normally. Minimum deposit required in a PPF account is Rs. 500 in a financial year. Maximum deposit limit is Rs. 70,000 in a financial year. Maximum number of deposits is twelve in a financial year. Public Provident Fund account can be opened at designated post offices throughout the country and at designated branches of Public Sector Banks throughout the country. The account can be opened by an individual in his own name or on behalf of a minor of whom he is a guardian. Following are allowed to open the account :
  • Single
  • Joint (Two or more)
  • Minor with parent/guardian
  • HUF

All the above mentioned investments are safe and giving good returns to the investors. The primary objective of a parent should be to have sufficient financial back up to take care of his future contingencies. In that respect investing in aggressive Equities or Mutual Funds won’t be a good idea. There are a number of investments that a parent can make and protect his future.

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