One need not be in a high flying job, to secure a peaceful post retirement life. It is not necessary, one need to allocate huge chunk from his monthly salary. You need not worry, if your job does not provide you for post retiral monthly benefits. Some planning and small monthly savings could help you overcome this. Employees in a Bank are more adept in this and I have had firsthand experience on their planning skills. They will borrow for anything and wherever facility is available, so that your borrowel becomes a monthly commitment and also gets absorbed in a fixed monthly repayment plan, which gets closed after a specific period of time. My intention here is to share some of the savings options, through which I had benefited.
Bank Recurring Deposits: I have heard people lamenting in Feb every year that the month's salary will be considerably reduced due to the Income Tax deductions. It is not as though it has been announced only now that IT will be deducted. You are aware of this even last April, when the financial year started. A little forward planning and a monthly savings could save you the blushes every Feb-Mar. Similarly, think about the fixed yearly commitments such as LIC Premia, Mediclaim premia, Car Insurance, Car Service, and Vacation. A single or multiple RDs will take care of all these commitments without hassles. Believe me, only the first year could be tough and the rest will be smooth. Also, wherever possible provide for Standing Instructions (SI) at the Bank branch where your salary is credited, so that your amnesia will not hamper this plan!
NSCs: In older times, the National Savings Certificate (NSC) issued by Govt of India was the most popular investment for Income Tax and it used to double in 5 to 6 years- not sure of the present status. We used to invest continuously for 6 years and from then on rotate the matured value of the first year NSC, so that there are no more fresh investments. One can also avail a 75% loan from Banks on NSCs. But, the scenario seems to have changed and would advise checking for the latest, before investing.
Tax Saver Bank Deposits: This appears to be the new chip in the block in that the amount you invest in this is safely locked up for 5 years, during which period you cannot foreclose or avail loan against this. But, this is taken as investment for Tax savings and also earns a decent 8+% of interest. My recommendations will be to keep investing in this every year for around 5 years and thereafter, rotate the matured amounts and can be construed as the above NSC's cousin
Public Provident Fund (PPF): A very popular scheme that could be opened in any Nationalized Bank (people prefer State Bank of India). The deposit is for 15 years and every year at least once you have to remit a minimum amount of Rs 100/- The catch is the interest rate almost remain stable and people normally pump in more in the last years , so that they get higher interest even for less number of years. You can open this PPF a/c even in your minor Son / Daughter name, which is advisable. Please check with SBI for more details and latest updates.
Gold Coins: My fervent request will be to invest a small amount, (say Rs 1000 per month) and every year buy some gold coins from reputed jewelers. Go for standard coins from the Swiss Volcambi or if not available coins with Bank's seals. Such reliable coins could always be exchanged for either gold ornaments or even cash. I have personally benefited from this investment when a gram of gold was sold at Rs 700 to the current 2000+ (24 carats). But, make sure that you safe keep such investments in Bank lockers and not at home. Go for gold coins and not ornaments. It is like a plot of land which fetches more value than a constructed house!
Silver: This seemed to have gained over Gold and in 2010, Silver fetched more returns than gold! People with girl kids can buy a kilo or so and it will definitely be helpful. By advice is buy silver bars and not articles.
Life Insurance: This investment is better made when you are young, so that the policy could be long term and premium is less. In addition, this will start maturing and providing a sizable return by around 45 years of age, when you start thinking about your Son’s education etc.,
Mediclaim: I had already mentioned that this is the single most investment one should do without any exceptions and the benefits from this are multi fold. I feel there is no need to discuss much on this and everyone must opt for such a medical insurance scheme from the early years so that when you are around 50 you had accumulated a healthy 5 lakhs plus policy. Please rush
I had called life and medical insurance as investments, as it is my earnest feeling that these are the real investments for a safe and happy evening of one’s life.
I have just shared some of the investment options, which in my opinion, are good and I have also been benefited. Please check with the local conditions and counselors before proceeding with investments and also let me know if there are any further options !
Bank Recurring Deposits: I have heard people lamenting in Feb every year that the month's salary will be considerably reduced due to the Income Tax deductions. It is not as though it has been announced only now that IT will be deducted. You are aware of this even last April, when the financial year started. A little forward planning and a monthly savings could save you the blushes every Feb-Mar. Similarly, think about the fixed yearly commitments such as LIC Premia, Mediclaim premia, Car Insurance, Car Service, and Vacation. A single or multiple RDs will take care of all these commitments without hassles. Believe me, only the first year could be tough and the rest will be smooth. Also, wherever possible provide for Standing Instructions (SI) at the Bank branch where your salary is credited, so that your amnesia will not hamper this plan!
NSCs: In older times, the National Savings Certificate (NSC) issued by Govt of India was the most popular investment for Income Tax and it used to double in 5 to 6 years- not sure of the present status. We used to invest continuously for 6 years and from then on rotate the matured value of the first year NSC, so that there are no more fresh investments. One can also avail a 75% loan from Banks on NSCs. But, the scenario seems to have changed and would advise checking for the latest, before investing.
Tax Saver Bank Deposits: This appears to be the new chip in the block in that the amount you invest in this is safely locked up for 5 years, during which period you cannot foreclose or avail loan against this. But, this is taken as investment for Tax savings and also earns a decent 8+% of interest. My recommendations will be to keep investing in this every year for around 5 years and thereafter, rotate the matured amounts and can be construed as the above NSC's cousin
Public Provident Fund (PPF): A very popular scheme that could be opened in any Nationalized Bank (people prefer State Bank of India). The deposit is for 15 years and every year at least once you have to remit a minimum amount of Rs 100/- The catch is the interest rate almost remain stable and people normally pump in more in the last years , so that they get higher interest even for less number of years. You can open this PPF a/c even in your minor Son / Daughter name, which is advisable. Please check with SBI for more details and latest updates.
Gold Coins: My fervent request will be to invest a small amount, (say Rs 1000 per month) and every year buy some gold coins from reputed jewelers. Go for standard coins from the Swiss Volcambi or if not available coins with Bank's seals. Such reliable coins could always be exchanged for either gold ornaments or even cash. I have personally benefited from this investment when a gram of gold was sold at Rs 700 to the current 2000+ (24 carats). But, make sure that you safe keep such investments in Bank lockers and not at home. Go for gold coins and not ornaments. It is like a plot of land which fetches more value than a constructed house!
Silver: This seemed to have gained over Gold and in 2010, Silver fetched more returns than gold! People with girl kids can buy a kilo or so and it will definitely be helpful. By advice is buy silver bars and not articles.
Life Insurance: This investment is better made when you are young, so that the policy could be long term and premium is less. In addition, this will start maturing and providing a sizable return by around 45 years of age, when you start thinking about your Son’s education etc.,
Mediclaim: I had already mentioned that this is the single most investment one should do without any exceptions and the benefits from this are multi fold. I feel there is no need to discuss much on this and everyone must opt for such a medical insurance scheme from the early years so that when you are around 50 you had accumulated a healthy 5 lakhs plus policy. Please rush
I had called life and medical insurance as investments, as it is my earnest feeling that these are the real investments for a safe and happy evening of one’s life.
I have just shared some of the investment options, which in my opinion, are good and I have also been benefited. Please check with the local conditions and counselors before proceeding with investments and also let me know if there are any further options !
Very well posted it sir. A good piece of information for a beginner like me :)
ReplyDeleteDear Sir,
ReplyDeleteThis blog really motivated me to ensure that I have a good retirement nest egg. I have started different monthly SIP's in diversified equity MFs, started RDs for sons education, opened 3 PPF accounts in mine, wife's and son's name (and deposit money in each account every month), have taken a term insurace for 50 lakhs and have taken a medi claim of 10 lakhs per annum for the our family and am buying 1 gram Gold ETF's every month.
When I look back now, it looks like a very good start as I am only 31, and I really intend to keep this disciplined approach till I retire. Thanks for all the advises based on your vast experience. Its really nice to know someone like you...
Thanks,
Anand