This is a fact which will shock you, “More than 47% of our young working citizen’s, have saved nothing for retirement”. If this is worrying then read this, “Another 40% have not saved enough for retirement”. You definitely do not want to be one of these citizens. You want to have sufficient amount of money to enjoy a happy retirement. Now, should you avail a retirement plan (a highly popular retirement planning product), which says…Just pay INR 1000 a month and get lakhs of rupees at retirement, or invest a few thousands a month and get a lump sum at retirement. Is this the way to do your retirement planning, or are there alternate ways to fund your retirement? Want help with your retirement planning? All you need to do is give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
There is a famous saying “Home is not a place, it’s a feeling”. There is no greater joy and a sense of achievement, than owning a home. You must buy a home, even if you have to avail a home loan to do so. Sure…it takes years to pay back the home loan, but the self worth you get on owning a home, is surely worth the effort. There’s more…Your house can fund your retirement. How does your home fund your retirement? Through reverse mortgage, of course. Reverse mortgage is the opposite of a home loan. You borrow money from the bank to buy a house, when you avail a home loan. You then repay this home loan in monthly installments called EMI’s (Equated monthly installments), within a fixed time period called tenure of the home loan. In reverse mortgage you pledge your home with the bank. The bank then gives you money, either as a lump sum or in monthly, quarterly or annual installments. This is just like drawing a salary. You can easily live on this money after retirement, making a retirement plan absolutely unnecessary for you.
You have availed a home loan to purchase your apartment. You have closed the home loan a few years back. Now, why not avail a home loan again and buy a second apartment? You can rent out this apartment and earn good rental income. If this apartment is in a popular holiday destination such as Goa or Lonavala, you can earn very good rental income. This rental income supports you in retirement. So why avail a retirement plan, when your home gives you money for retirement?
If you are a farmer, you can buy agricultural land. You can cultivate cash crops such as cotton, jute or sugarcane on this land. You can cultivate pepper, cardamom and banana saplings on this land. The money you earn is agricultural income. You earn lakhs of rupees a year, in agricultural income and….This income is not taxed. India is a country where food inflation is very high. Food is so costly. You can earn a lot of money through agriculture and save this money for retirement. Good agricultural income means you don’t need a retirement/pension plan.
You earn royalty income from a publisher, if you write a book. For those who don’t know, the author of a book gets royalty payment from the publisher, for the use of copyrights, trademarks and patents. Successful authors are able to sell about 20,000 books. The average price of the book is around INR 100 to INR 300. Royalty percentage is around 7.5% to 10% of the MRP (Maximum Retail Price), of the book. With any luck you could make around INR 6 Lakhs a year in royalty income, from your publisher. Maybe less……
Royalty income is an excellent support in retirement. You just write books and earn income. You can also write for newspaper columns or even create an ebook, which gives income for years. Now, you don’t need to avail a retirement plan. Royalty income, funds your retirement.
An excellent method to save for your retirement is having passive sources of income. If you have the money, you can lend to a business. If you have good knowledge and experience in your stream (line of business), you could even be an advisor to a business. How about dairy farming? Rearing of cows and buffaloes to give milk and milk products is dairy farming. Dairy farming requires money to buy good cattle breeds and also food for them. Why not join as a partner to a dairy farmer and put your money into the business? Milk has high demand and is sold throughout the country.
The dairy farmer invests your money to buy a chilling unit, for the storage of milk and milk products. The dairy farmer could also invest your money, in a khova making unit. Khova has high demand and can be sold to sweet shops. You get a share in the profits of the business and can easily set aside money for your retirement. You could also be an advisor in dairy management and make a lot of money. There are also other businesses which could use your skill, knowledge and money. Why do you need a retirement plan, when a business functions as an excellent passive source of income?
So what have you learnt from this article? Planning for retirement is a must, but a retirement plan is not an absolute necessity for a happy retirement. There are better alternatives than a retirement plan. You get more money from these alternatives, than from a retirement plan. When your home, your agricultural business or even royalty income can give you higher returns than a retirement plan, why bother availing a retirement plan.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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