Retirement marks a new chapter in life, and making the right investment choices is crucial to securing a comfortable future. However, with great opportunity comes great responsibility.
As the retirement corpus is the biggest amount that a person receives in their lifetime, it is very important to deploy that money wisely.
In this blog, we’ll explore some straightforward yet essential safety measures to ensure your retirement corpus is protected.
Keep a separate corpus for Medical Expenses
Sometimes Health Insurance coverage may not be enough. Further, if a senior citizen does not have a Health Insurance Policy, getting a new one is very difficult at the age of 60. Considering the inflation in medical expenses and the overall health sector, keeping aside some part of your retirement corpus (maybe 10%-15%) is a smart idea.
Diversify your investment
In your retirement period, you should invest your money in safe investment instruments that provide guaranteed returns and liquidity. Avoid investing money in very risky options (For example Futures & Options). If you understand the Equity Market, then you can invest some portion in Equity, however, here “Asset Allocation” becomes the most important. How much money you are investing in Equity, makes a difference.
Further, you should also avoid investing money in Unorganised/unregulated investment instruments such as Real estate as it will take a major chunk of your investment and you will have to deploy large money into it, which is not advisable. On the contrary, Banking is regulated by RBI, and the Share Market / Debt Market is regulated by SEBI.
Spread your money across various investment avenues like Post-Office investment, Bank Investment, bonds, debentures, and mutual funds. This way, if one investment takes a hit, your entire retirement fund won’t suffer.
Emergency Fund: Prepare for the Unexpected
Life is unpredictable, and unexpected expenses can arise. Having an emergency fund ensures that you won’t need to dip into your retirement savings in times of crisis. Aim to save at least three to six months’ worth of living expenses in a readily accessible account.
Stay Within Your Comfort Zone after Retirement
Before diving into investments, assess your risk tolerance and after retirement your risk appetite is low. After retirement, the top priority of investment should be safety and liquidity and not earning higher returns.
Regularly Review and Rebalance: Keep Your Portfolio in Check
Your investing portfolio should change as the markets do. If you have allocated a portion of your retirement corpus to mutual funds or equity markets, you must periodically assess your investments and rebalance your portfolio. By doing this, you can make sure that your asset allocation continues to reflect your risk tolerance and financial objectives.
Take Expert Advice into Account: Consult Experts
As this blog’s opening points out, the retirement corpus is a sizable sum of money and should be invested wisely. The primary goal of investing the aforementioned funds is to ensure that they will produce a decent income that will enable you and your family to survive after retirement. Therefore, don’t be afraid to consult financial experts for help. They can assist you in managing the complexity of retirement investment by offering tailored advice based on your particular situation.
Plan for Inflation: Protect Your Purchasing Power
The purchasing power of money decreases with inflation over time. Make sure your investment accounts for inflation to guarantee that your retirement money can maintain its value and continue to fulfill your demands in the future. Thus, it might not be a wise idea to put all of your money in debt asset class.
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When investing your retirement corpus, you must be committed to protecting your financial future and make thoughtful decisions. You may confidently navigate the field of investing and ensure a safe and enjoyable retirement by adhering to some basic safety precautions. Recall that investing wisely for a better future is something you should do at any time of the day.