Are you all set to take rest and enjoy life after retirement? But have you planned for your financial well-being for the life after retirement?
Many people face the challenge of maintaining a constant flow of income in-order to maintain the living standard.
Recommended read: Save ATM charges in India
Most people who plan for retirement end up investing in items or schemes that generate low returns. You must be wise and not just follow the traditional methods of investing for your retirement. You must understand the market and invest accordingly.
Here are 5 ways in which you can invest your money and get the max out of it:
#1. Start Saving at Early Stage (SCSS)
In-case you are thinking of saving money for the retirement then it is better to start saving and investing as much as you can.
This will get you compound interest on your money and generate a new source of income. The generated income can be reinvested to generate more earnings.
As a popular saying goes by, the more you invest when you are young; the better will be your life after retirement.
Somehow this is true and you must give it a thought. Even if you have not started to plan for your retirement now, it is never late.
Get some money from your next salary and invest in mutual funds or in some other things like Senior Citizen Savings Scheme (SCSS) that will get your more earnings.
However, the entry barrier is 60 years if you want to invest in this scheme. But the people who have opted for the retirement at the age of 55 years can also take benefits from this scheme.
You can invest up to INR 15 lac using public sector banks or post office. This investment can be made tax free under section 80c of Income Tax Act.
#2. Understand your retirement needs (POMIS)
You need to believe that retirement is expensive. You have no source of income and also you want to rest and have a good day, free from worries and tensions. It has been researched that you will need 705 of your preretirement income in case you are a lower earner and 90% in other cases.
This will help you in maintaining your living standards even when you have stopped working. This is the time when you need to learn how to take charge of your financial future.
The safest way to secure future is to plan ahead of time. You can start by investing in Post Office Monthly Income Scheme (POMIS).
This is a most hassle-free way of ensuring income for your retirement days. It also has the investment cap of INR 4.5 lac for a single account and INR 9 lac for a joint account.
The maturity period for this scheme is 6 years. And if you have invested in it for whole 6 years, you are entitled to take 5% as a bonus.
Also read: Complete guide MIP monthly income plan
You can take the payment from the post office or even transfer the amount to your bank account directly. The returns are added your income and taxed as per the income tax rules.
#3. Contribute from your Salary (EPF)
The most appropriate way to invest in your retirement savings is by contributing to your EPF account.
Once you apply for EPF, 12% is automatically deducted from your basic salary and added to EPF account. This definitely lowers your in-hand income but also secures your future.
You don’t have to worry about saving money when you start giving some percentage of your money in the form of PF.
Also, you get the group Insurance Cover with EPF. The insurance coverage that you get is 30 times the basic salary which has been capped at INR 15000. You finally get a huge amount from EDLI during your retirement plan.
#4. Invest the amount you can afford for fixed time (FD)
FD is the fixed time limit investment which is offered by the banks. You are not bounded to invest a minimum amount.
This is the simplest and safest way in case you are looking forward to safe returns. The time period of investment can be a week to 10 years, in general. You can also opt for depositing the interest to your saving bank account.
In case you are investing in long term FDs, that is more than 5 years, you can apply for deduction under section 80C and it can’t be liquefied in between the term. This is a low-risk investment only if the bank is in good financial conditions. If the bank goes bust you are guaranteed maximum of INR 100,000.
#5. Low Investment for Huge Returns (POTD)
If you don’t earn enough to invest large amount, government has some arrangements for you also. You can invest INR 200 minimum and then in multiples of INR 200 and get interest on your investment.
The interest on Post Office Time Deposits (POTDs) is calculated quarterly and is provided to the customer on annual basis. The tenure of investment can range from one year to five years. The return is subject to tax deduction, however tax is not charged on the source.
You can apply for tax deduction under Section 80C of Income Tax Act.
Just because of the reason that your friends are spending lavishly and not saving money for the future doesn’t mean that you must also act like them. Try to save money by not spending it on unnecessary things. Also keep a check on your purchases and expenses
Ankur Aggarwal is a Digital Marketer, Entrepreneur, Traveler, Blogger, Foodie. Have been blogging since 2010. In 2016 he scored 99.2 percentile in XAT Exam for MBA, left that to pursue his Online business dreams. He has multiple websites but incomeboy.com is his new venture. The purpose of Incomeboy is to pass on 100% accurate and genuine information on making and saving more money either online or offline in India. Write to him at email@example.com.