Every individual may have different financial goals. But one common goal most people, especially salaried employees, harbour is securing their post-retirement life. You may want to be financially independent during the second innings of your life.
To achieve this goal, you must start planning for it early and start investing towards your retirement fund from a young age, preferably, you can invest in insurance-cum-investment schemes like ULIP Plan, as soon as you get your first job. This will help you have enough time to accumulate significant wealth to make your savings last.
Let us look at the best investment options available in India that can help you take your retirement goals off the ground.
The National Pension System is a long-term investment plan offered by the Government of India. It is a voluntary retirement plan where you parodically invest a small amount throughout your working years to build a corpus for your post-retirement life. Once you reach retirement age, you can draw a pension and take care of your regular expenses.
You can also withdraw up to 40% of the accumulated corpus in a lump sum to take care of your major financial requirements, like paying off the home loan, paying the child’s education fees, etc. Thus, by investing in NPS from an early age, you have better chances of building a sizeable corpus and doing everything you wish after you hang your boots.
Mutual funds are perhaps the most popular investment option in India. You can invest in any mutual funds scheme of your choice to suit your risk-taking capacity and long-term goal. To accomplish your retirement goals, you must start investing in mutual funds through SIP, wherein you can invest a small amount to accumulate wealth with a compounding effect over a period of 10-15 years or more and meet your retirement goals.
ULIP (Unit Linked Insurance Plan) is primarily a type of life insurance policy. It allows you to protect your family’s financial future and build wealth for your future needs. The hybrid nature of ULIP makes it a popular investment choice among Indian investors.
One of the reasons why the ULIP plan is an excellent investment to have in your portfolio to meet your retirement goals is that it allows you to invest in money market instruments like bonds, equity and debt mutual funds, shares, etc., and get inflation-adjusted returns. Historically, ULIPs have offered about 12-15% returns over a 10-15 years investment period.
Thus, by investing early in ULIPs, you can accumulate a sizeable corpus for your retirement goals. You can use the ULIP calculator to know the approximate returns you can get with your investments and adjust your portfolio accordingly. For example, if you want to send your child to a foreign university, you can invest a significant portion of your funds in equities and let the money grow.
Public Provident Fund is another long-term investment plan backed by the government of India. It is a suitable investment plan for all, especially if you are looking for a low-risk scheme. It gives you guaranteed returns. The minimum investment tenure for PPF is 15 years, and you can open it at any nationalised bank or post office. Besides, you can start investing in PPF with a small amount, as low as Rs. 500 per month and build wealth over a period to secure your retirement goals.
Now that you are aware of the different investment options, do your due diligence and invest in one or more than one of these schemes and take your retirement goals off the ground. The earlier you start investing, the better.