What’s good about this

The Times of India (New Delhi edition) - - Times Personal Finance - Re­turns not as­sured but risk low. More tax-ef­fi­cient than Op­tion I. In­come can be cus­tomised by in­creas­ing the monthly with­drawal to match in­fla­tion. If left un­touched for 7-10 years, eq­uity por­tion has po­ten­tial to earn higher re­turns.

fac­tored in in­fla­tion in his re­tire­ment plan­ning should get ready for a life of penury in his later years.

The ul­tra-safe re­tire­ment plan (see graphic) re­lies solely on in­come from an­nu­ity and debt op­tions that give as­sured re­turns. While it is safe from the volatil­ity of the mar­ket, it will not be able to match the march of in­fla­tion.

What re­tirees can do

Mu­tual fund houses, stock an­a­lysts and fi­nan­cial plan­ners don’t tire of telling us that eq­ui­ties have the po­ten­tial to give the high­est re­turns among all as­set classes. But as we have seen in the past few months, eq­ui­ties bought at the wrong time and at the wrong price also have the po­ten­tial to churn out the big­gest losses. For a re­tiree who de­pends solely on in­come from his in­vest­ments, even a small loss can be quite dis­con­cert­ing.

Even so, re­tirees do need a dash of eq­ui­ties in their port­fo­lios to help them stay ahead of in­fla­tion. They also need to in­vest in mar­ket linked in­stru­ments that are more tax ef­fi­cient than fixed de­posits and small sav­ings schemes. Pen­sion in­come and in­ter­est from bank de­posits is fully tax­able. Se­nior ci­ti­zens en­joy a 50,000 ex­emp­tion on in­ter­est in­come but any­thing be­yond that is taxed at the nor

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.