DNA (Daily News & Analysis) Mumbai Edition : 2019-02-11
FRONT PAGE : 22 : 22
NAL FINANCE PERS 04 DAILY NEWS & ANALYSIS MUMBAI I I MONDAY, FEBRUARY 11, 2019 www.dnaindia.com twitter.com/dna epaper.dnaindia.com facebook.com/dnaindia I I I Stars&money Kumar Shankar Roy is not right, say financial planning experts. Mukesh D Dedhia, director, Ghalla Bhansali says: “We have to treat retirement planning as separate from savings for children’s’ education, marriage, housing, car, travelling, medical expenses, etc.”
Factors specific to each individual could be current income, past savings, inherited wealth, income stability, current expenses, number of family members, health of family members and especially of the earning member, immediate and future family responsibilities, relations amongst family members, partners, colleagues, Dedhia advises.
Naveen Kukreja, CEO & co-founder, Paisabazaar.com wants youngsters in their 20s and 30s to invest in Equity Linked Savings Schemes (ELSS) and other equity mutual funds, given that they would have at least 25-30 years to build a retirement corpus.
“Equities beat other asset classes and inflation by a wide margin over the long term. Moreover, longer investment horizon gives youngsters more time to recover from market volatility and benefit from the power of compounding. ELSS also provides tax saving up to Rs 1.5 lakh in a financial year, under section 80C,” Kukreja adds.
Apart from inflationbeating returns, equity MFS also offer a higher degree of liquidity, as they can be redeemed whenever the need arises. Even the lock-in period involved in ELSS is just three years, which is the shortest amongst tax saving and retirement products such as PPF, pension Ulips and NPS. Your investment in pension Ulips and PPF gets locked in for five years and 15 years respectively, whereas, under the All Citizen Model, your NPS investment is locked until retirement.
“Traditional pension plans such as pension Ulips and NPS involve a compulsory purchase of low-return annuities, which equity MFS do not involve. With average life expectancy rising, this would increase the risk of running out of your retirement corpus during the lifespan,” says Kukreja. [email protected] Jamie Lever, stand-up comic, shares some money tips Shruti and Ravi have a penchant for coffee. Each of them spend about Rs 100 per day, sometimes even more, on coffee. This alone costs them Rs 2,500 a month. Then there are weekend night-outs with movies, pizza parties and so on. By the 25th of the month, these millennials are out of money.
If Shruti and Ravi reduce their coffee, they can save for retirement. As per NPS Trust calculator, a 25-year old saving Rs 1,000 per month till 60 years and investing in 10% return instrument, can get a monthly p7ension of Rs 7,657 (based on 40% corpus in the annuity). The annuity rate is assumed at 6%.
The government announced Rs 3,000 pension for unorganised workers in the interim Budget. But youngsters in the organised sector can plan for their retirement easily. Read on to know how. Mumbai: Think long-term and save small amounts monthly Your first paycheck z I gave it to my mother, she told me we’ll give it in charity so I went with it Your most expensive purchase till date z A property I’ve invested in Who manages your money and where do you invest z My father does. He’s my personal investment manager Your advice about money z Please save, invest, save some more and spend wisely. Mutual funds and real estate are great to invest in. They’ll give you long term returns, so think long term and put in small amounts monthly Your money mistake z Nothing so far thankfully Next big purchase you are planning z Another property definitely Bollywoodlife.com No salary SMS Retirement is seen up as a golden period of abundant time and fun. But remember there will be no salary once you retire. While government employees are entitled to pension after retirement, those in the private sector, who have no pension to fall back upon, must plan ahead.
Given their long daily work schedules, weekends are when youngsters recharge themselves. But many spend lots of money to have ‘fun’. The money goes out of their pockets to the cash registers of restaurants, cafes, pubs, hotels, resorts, etc. The best part is, young people don’t even acknowledge the problem. With budgets getting extinguished within 20-21 days, there is nothing left to save. But for goals like retirement money has to be saved and invested.
Three decades ago, the best-paid professionals earned a top income of Rs 2,500-3,000 per month. Seems like pittance today, doesn’t it? Even the best salaries you earn at the peak of your career will look small when you look back 30 years after your retirement. Rising living standards, smaller families, shorter work tenure and longer life expectancy are setting up youngsters for a NEW OFFERINGS DSP MF launches two index funds Withdrawal Plan (SWP) to meet regular cash flow needs, post-retirement.”
The retirement fund also addresses the emerging realities where people live long after retirement. Also, people now aspire to retire earlier than before.
ICICI Pru AMC’S recently launched ICICI Prudential Retirement Fund is the latest in the retirement MF space along with products from AMCS like UTI, Reliance, Principal and Tata. terrible retirement phase. And then there is inflation: the silent money killer. If you retired with a princely sum of Rs 1 crore today, 30 years later it would be worth only about Rs 13 lakh. “I know I need to save, but I can’t. My salary of Rs 27,000 is not enough. Maybe I will be able to after three to four years,” says 24-year old Rahul Sharma, who lives with his parents in East Delhi. DSP Mutual Fund has launched two open-ended index funds, DSP Nifty 50 Index Fund and DSP Nifty Next 50 Index Fund. The Nifty 50 Index tracks the performance of the top 50 companies by market cap. The Nifty Next 50 Index tracks 51 to 100 stocks ranked by market cap. The funds are suitable for first time investors who want to access equity markets and at a low cost. Investors looking for a diversified equity exposure and seasoned investors looking to add a core allocation to their portfolio would also benefit from exposure to these funds. The new fund offer period closes on February 15. your monthly pension may reduce to one-third.
There are different options to save for retirement, ranging from traditional avenues like Employee Provident Fund and Public Provident Fund, to National Pension System and retirement mutual funds. Bank deposits are not great because they attract high tax and also deliver lower-inflation adjusted returns. In fact, only equitylinked retirement products like NPS and retirement MFS make sense for somebody whose retirement is 25-30 years away.
Nimesh Shah, MD & CEO - ICICI Prudential AMC says: “The best time to plan for your retirement is when you are young and working. Investing in a long-term MF scheme enables in building a good retirement corpus. It also gives flexibility of Systematic Close-ended income fund from SBI MF Retirement blueprint SBI Mutual Fund has launched a close-ended income fund, SBI Debt Fund Series C-43 (1176 Days). The scheme seeks to provide regular income and capital growth with limited interest rate risk to investors through investments in a portfolio comprising debt instruments such as government securities, PSU and corporate bonds and money market instruments maturing on or before the maturity of the scheme. The new fund offer closes on February 13. Minimum subscription amount is Rs 5,000. Despite scores of studies showing that Indians, especially youngsters, are not preparing for retirement, the fact is that retirement cannot be wished away. Youngsters may say they have 25-30 years left, but the delay will cost a lot of money. For every 10-year delay in regular saving, Mission retirement Many investors often mix up retirement saving with other goals. Chennai-based S Vardhini, in her mid-30s, saves money for her retirement, child’s future education and marriage. She saves the money in one avenue. This approach FINANCIAL PLANNING SBI Focused Equity Fund Fund name SBI Focused Equity Fund Fund category Focused Benchmark S&P BSE 500 TRI Inception date September 17, 2004 CIO Navneet Munot Fund manager R Srinivasan QAAUM (December 2018) Rs 3,167 crore CRISIL Mutual Fund Rank as on December 2018 2 Redemption within 1 year - 1% After 1 year from the date of allotment - nil Exit load “T Let’s TALK Money, ! Honey VIVEK KAUL
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