i need to retire rich!

IIPM, GURGAON

Hi, my name is Sujit Kumar and I am 43 years old. I have been working for the last 18 years with Delhi Development Authority. My take home per month is Rs.19,000. My key concern as of now is retirement planning. With the recommendations of Sixth Pay Commission in pipeline, I expect to get much more...

Retirement planning must always remain the long term objective of any individual. Investing in safe asset classes & earning risk-free interest is not enough because steady returns only ensure that inflation keeps eating into your resources, with the result that your ‘real’ net worth actually decreases over a period of time.

Therefore, it is advisable that one should invest in growth assets like Equity Mutual Funds for positive inflation adjusted returns. Here is what Anil Mascarenhas, Editor, India Infoline, has to recommend, “Invest around Rs.6,000 to Rs.8,000 in a SIP of either Reliance Vision or HDFC Top 200. In case, Sujit wishes to invest in stocks, he should take into account his investment horizon and his risk appetite and make an asset portfolio accordingly.”

Further on, Mascarenhas advises Sujit to stick to the frontline counters as the downside risk can be minimised by holding on for a longer period. “In case you wish to invest keeping in mind the tax saving option, you could invest in SBI Magnum Tax Gain or Principal Personal Tax Saver either by putting in a lump sum or through SIP,” he adds.

Those looking for a happy retired life would do well to additionally take Medicare to cover future medical costs or invest in health insurance plans with adequate cover for themselves and their spouses. Here’s to a happy, healthy, retirement then!

Sujit Kumar

“I started my retirement planning late; I wish I could have done it early,” laments Sujit. He blames his conservative outlook for the majority part of his initial portfolio consisting of fixed deposit and post office saving schemes (mainly PPF & NSC). In fact, this conservative spiel was what his department at DDA advised at that time. “However, with rising costs and declining interest on investments over the years, I realised my folly of relying only on these instruments.” Having decided that fixed income instruments were not the solution for him, as they failed to fight inflation concerns, of late, Sujit has begun investing in balanced as well as equity oriented Mutual Funds. “The stock market is going great, I wish to invest something there too, but not as of now,” he says.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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