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The Better Retirement - Lesson out of a Teacher's life
Aug 31, 2018
5 mins | Views 325
Teaching is a noble profession working to shape minds for a better future. But have you ever thought about what will be the life of a teacher after Retirement?
This story is about Mr Vijay, a school teacher. He has taught a lot of students in his life and seen them grow into successful contributors to the society. Nowadays, after retirement he is teaching them one more thing through his own experiences – The Power of Compounding and The Importance of Discipline in life as well as in Investments.
His journey of investing started when he was reasonably young. He would often be perturbed seeing that the teachers who were retired were getting a very small amount as pension. This created a sense of insecurity in his mind for his own family.
After discussing it with his friend who was a financial planner he took a decision to invest in mutual funds through disciplined Systematic Investment Plan (SIP). Since he was investing for a long period in which generally equity outperforms other asset classes, he started an SIP in Equity Funds. Few years before retirement he initiated a gradual shift from equity funds to short-term Debt funds through a Systematic Transfer Plan (STP) to meet his post-retirement expenses.
Now, being retired with a big corpus he has big plans for life. His post-retirement life includes travelling with his family, teaching youngsters about the importance of financial discipline to achieve financial freedom and how compounding can help them achieve big retirement corpus.
He generally advises youngsters to follow a disciplined investment approach of investing a particular sum of money at fixed intervals through SIP. He explains that it helps to get more units of the mutual fund when the markets are down and fewer units when the markets are up, hence averaging the cost of buying the mutual fund and taking away the worry of timing the market.
He also explains SIP is just a tool for investment so the decision of choosing a mutual fund must depend on the risk profile. For him, risk profile changed while approaching his retirement from aggressive to conservative and he used the STP to shift from a riskier equity mutual fund to a safer and more stable Debt Mutual Funds.
He explains compounding as “interest on interest” and hence growing the money faster depending upon the investment period while also emphasizing that to take the benefit of compounding one has to start early as every year of being invested makes a difference.
Vijay has been an embodiment of the Guru who not only preaches but practices too. That said, we wish all our gurus, A Happy Teachers’ Day.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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