If you plan to lead a comfortable life after retiring, you need to be financially stable. So, have you planned your finances accordingly? Have you considered investing the retirement corpus efficiently? It is understandable that at this point in your life, taking risks with investments may not be possible. That is why planning for retirement only entails secure avenues for investment. Here are a few options that you can explore:
- Debt Funds and Monthly Income Plan (MIP)
Debt funds are one of the investment options which seek to grow capital but if you want to try your hand at equities, then you may invest in Conservative Hybrid Funds. It’s a debt-oriented fund with limited exposure to equities
- Equity Mutual Funds
Investing in equity oriented mutual funds is considered a smart move in the long run. Most financial experts believe that one of the options is STP (Systematic Transfer Plan). Through STP, you may invest in a specific fund, and later transfer parts of it, regularly, into another scheme of the same mutual fund. This may lead to increase your potential profits. A portion of the retirement corpus, say 20%, may be invested in equities mutual funds so as to beat the inflation and to gain from power of compounding. You can also invest in Equity Linked Savings Scheme (ELSS) for tax benefits. It is suggested to consult your financial advisor before investing in any type of mutual fund.
- Immediate Annuities
Annuities are more like insurance rather than investment, but these are quite effective as they produce an income, which is what you need when you retire. You have to make a lump sum payment, and the insurance company will guarantee you monthly income for life after a specified time period. It also offers the option of fixed or variable annuities. Additionally, you can choose the term of the annuities, which can range from 10 years to joint life payouts.
- Invest in Bonds
Another option is investing in bonds. Here, you basically loan your money to a company or the government, and they agree to pay you a fixed interest over a specified time. When the bonds mature, the principal amount is returned to you. Thus, the interest that is accrued from the investment in bonds can be a source of income with low risks. MIPs may be one of the ways to invest in bonds.
- Real Estate Rentals
When it comes to a steady source of income, investing in real estate may be a lucrative option. Depending on your budget and requirements, you can invest in an apartment or independent house and put it on rent. This is one of the sources of income post retirement. However, factor in expenses related to maintenance and owning a property. Additionally, you will need to tide over vacancy rates as no property is rented all the time.
- Fixed Deposits
This is one of the most common ways to invest your money and get a fixed income. With fluctuating interest rates, the monthly income might differ; however, you can be sure of getting a fixed amount when the FD matures, especially when it is done at compounding interest rates. Putting money in senior citizen savings scheme may also be a good idea.
With so many great options to invest the money you have, retirement could be the best time of your life.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.