Retirement should be a phase where you enjoy life. This is possible if you have enough money to retire in peace. Plan for retirement, well in advance.
The biggest question is how should your retirement portfolio look like? Simple, your retirement portfolio should be a mix of various products. It should be diversified. Diversification is an important point to keep in mind when planning for retirement. This is a powerful strategy of forming an investment portfolio.
Diversification balances investment avenues. It ensures that the risk in a financial product is minimized by availing another product. Over the years, you can accumulate a sufficient retirement corpus.
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These 5 Products Should Be There In Your Retirement Portfolio
Based on your ability to take risk, you may adopt an adventurous, moderate or conservative approach in investments. Irrespective of your approach, you should invest in the following investment avenues.
Equities give tremendous returns, if you plan investment right. Equities have a great potential for growth. Though equities are considered to be risky, in the long run, equities can generate huge returns.
Equity doesn’t mean shares alone. It includes Mutual Funds and ETFs too. In fact they are very popular. You may also buy your company shares by participating in ESOPs and IPOs. In the long run, equities beat inflation and give you more than just decent returns. Equities could be a great investment for retirement.
The specialty of these products is stability. You might invest all the money that you like to save for emergencies in FDs, as these can be liquidated easily.
Though Health Insurance doesn’t give you returns, it protects you from spending all your savings on medical expenses. It is also an investment in a way because you save a lot on premiums when you take Health Insurance early in life. When you are old, premiums on health insurance plans tend to be high.
4. NPS is great for retirement
National Pension Scheme (NPS) is another product that you should include in your retirement portfolio. It is a long-term savings scheme. If you are willing to bear risk (as NPS has 50% investment in equity), you might as well start contributing to the NPS account. By contributing regularly, each year, you will get a regular income post-retirement.
Buying your own home is as important as breathing and eating. Owning a house is not only a great accomplishment but also a good investment. It is a good security during retirement and can be used in reverse mortgage. Be sure to clear every due and EMI attached to your property before you retire.
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