Financial instruments in which to invest for your retirement planning


When it comes to planning for your retirement, there are a number of financial instruments you can invest in to help build your retirement capital.

Let’s look at some of these debt securities as well as equity instruments.

Debt Options: In terms of rate of return, the employee provident fund (EPF) tops the list. The prevailing rate of return is 8.10% per annum, and it qualifies for tax deductions of up to Rs 1.5 lakh under Section 80 C of the Income Tax Act 1961. revenue. It also has EEA tax status, which means returns are also exempt. tax deduction.

Next comes the Public Provident Fund (PPF). It offers the same advantages as the EPF. One can invest anything between Rs 500 and Rs 1.5 lakh per year to keep it operational. The prevailing rate of return is 7.10% and rates are announced quarterly.

retirement planning

Stock options: If you’re working on building your retirement corpus, it’s imperative that you start investing in stocks early to give your portfolio the longer duration it needs to grow to a decent size. No other instrument can match the returns provided by stocks and stock-related instruments, such as mutual funds.

“Building a retirement corpus is a long-term objective, and involves our entire professional life. Also, given inflation, we need to invest in a portfolio of assets that accumulate over a period of time and create wealth,” says Ramamurthy.

One could choose between simple equity schemes or solution-focused retirement funds as part of the equity component of the retirement corpus.

NPS: The retirement solution offered by the state offers a combination of both debt and equity depending on one’s choice and age. It provides a tax deduction of up to Rs 1.5 lakh under Section 80C and an additional deduction of Rs. 50,000 under Section 80CCD(1b).

“NPS is tailor-made for retirement. It also provides an additional tax benefit to the investor and the employer. Its mandatory lock-in and strict withdrawal conditions impose discipline on the investor,” says Col. Sanjeev Govila (Retired), Securities and Exchange Board of India (Sebi) Registered Investment Advisor and CEO of Hum Fauji Initiatives.

That said, there are downsides too.

To learn more about these downsides and how best to build a corpus for your retirement, read the full story.

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