Investment options to consider after retirement
As you approach retirement, it is important to start thinking about how you will generate income to support your lifestyle. Even if you’re getting a pension from any source, you could be looking at some additional money regularly. There are a number of investment options available to retirees, each with its own advantages and disadvantages.
Some of the most popular investment options for retirees include:
- Fixed income investments: These investments, such as bonds and FDs, offer a steady stream of income and are relatively low-risk. However, they also tend to offer lower returns than other types of investments. Also, they could be burning a big hole in the returns you get due to them being very tax-inefficient.
- Mutual funds: Mutual funds are baskets of stocks or bonds that are managed by a professional investment manager. They offer a way to diversify your portfolio and reduce risk. Systematic Withdrawal Plan (SWP), which can be taken from almost any MF, is one of the most flexible and certainly the most tax-efficient way to take a regular income.
- SCSS: It is a government-backed savings scheme that is specifically designed for senior citizens. It currently offers an interest rate of 8.2% per annum paid quarterly. However, the entire interest paid is fully taxable and you have no flexibility of payment in terms of periodicity or cumulative returns.
- Guaranteed Income Plan: These plans work by having the policyholder pay a premium for a set period of time. Once the premium payment period is over, the policyholder begins to receive a guaranteed income stream for the rest of their life. They also provide life insurance cover of up to 10x of the yearly premium. It is a good option for retirees who are looking for a safe and secure way to generate income but only a tiny percentage of such plans are really worth going in for due to poor returns.
The best investment option for you will depend on your individual circumstances and goals. It is important to work with a financial advisor to develop a retirement investment plan that is right for you. You can always connect with us to help you develop a plan catering to your customized retirement needs.
(Contributed by Abhilash S Rana, Financial Planner, HNI Desk, Hum Fauji Initiatives)
The road to riches is paved with risk
Imagine yourself as a fearless captain of a ship, sailing across the vast ocean of investments. Just like the sea, the world of investments is both alluring and unpredictable. But here’s the secret: risk is a compass, which can guide you toward the treasure troves of successful investments provided you can read that compass successfully.
The Adventure Begins: Embrace Risk with Open Arms
In the world of investments, risk is your constant companion. Many might see it as a menacing storm on the horizon, but savvy investors understand that it’s the wind in their sails. Without risk, there can be no reward. Just like our captain facing turbulent waters, you too must embrace the role of risk in your investment journey.
Setting Sail: Risk and Diversification
Some risks are like gentle waves, while others can be mighty tempests. Diversification is your first mate, helping you spread the risk across different assets. Just as a skilled sailor doesn’t put all his trust in a single gust of wind, a smart investor doesn’t rely on one asset alone.
Charting Your Course: Risk Tolerance
Just as every captain has a unique vision for his journey, every investor has a different risk tolerance. It’s essential to know your limits. Understanding your risk tolerance helps you navigate the seas of investment more confidently.
Weathering the Storms: Risk Management
No sailor heads into uncharted waters without a plan. Risk management strategies, such as stop-loss orders and regular portfolio reviews, act as your sturdy ship, keeping you afloat during market turbulence.
The Final Destination: Success
In the end, the role of risk in successful investment is clear: it’s the wind that fills your sails, the compass that guides your way, and the spice that makes the investment journey flavorful. To achieve your financial goals, you must learn to respect and harness the power of risk.
So, are you ready to hoist your investment flag and set sail? Remember, in the world of investments, risk is not your enemy – it’s your most trusted ally on the path to financial success. Embrace it, manage it, and let it carry you to the shores of prosperity.
(Contributed by Gautam Arora, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)
Why Cheapest Is Not Always the Best in Health Insurance?
Health insurance is a critical financial protection for you and your family if you do not have an employer or Government-provided health scheme. It can help you pay for medical expenses. However, not all health insurance plans are the same. Some plans are cheaper than others, but they may not offer the same level of coverage.
Why the Cheapest Plan may not be good enough for you?
- It may not cover all your medical expenses. Some cheap health insurance plans have high deductibles or co-pays. This means that you will have to pay a significant amount of money out of your pocket before your insurance starts to cover your expenses.
- If you have a pre-existing condition, such as diabetes or heart disease, some cheap health insurance plans may not cover your treatment.
- It may have a limited network of hospitals and doctors. This means that you may have to travel to a different hospital or doctor to get the care you need. This can be inconvenient and time-consuming.
- It may have high administrative fees. This means that you will have to pay more for your insurance, even if you don’t use it.
How to Choose the Right Health Insurance Plan?
- Consider your needs. Think about what kind of coverage you need and what your budget is. If you have a chronic condition, you will need a plan that covers your pre-existing conditions.
- Read the fine print. Make sure you understand the terms and conditions of the plan before you sign up. This includes the deductible, co-pays, co-insurance, and coverage limits.
- Compare plans. Get quotes from several different insurers before you make a decision. This will help you find the best plan for your needs and budget.
Health insurance is a vital part of financial planning. It is very important to consider your needs and budget when choosing a plan but not straightaway go in for the cheapest one.
(Contributed by Ankit Singh, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)