"Lambi Innings Ki Taiyari" with Reliance Capital & BlogAdda
On the 6th of June, Saturday- Reliance Cap along with BlogAdda organized an informative session, “Lambi Innings Ki Taiyari”, on investment planning for retirement. This was my first BlogAdda event & I was really excited. And let me tell you, the session was a smashing hit with the audience! The board room was packed when I reached, & we were soon joined by some of the senior officials of Reliance Capital Asset Management- Sundeep Sikka, Himanshu Vyapak, Ajay Jethi & Sharad Goel.
“A Stitch in Time Saves Nine”- this is the perfect proverb to explain, why you need to start planning for your retirement now. The earlier you start, the better it is. Even if you are in your early 20s, start off right away! India is one of the youngest countries in the world, & in a few years will have the oldest people as India’s age pyramid will reverse by 2050- so starting to plan for your income & earnings for post retirement are essential. Due, to inflation, the amount required for expenses will increase 7 fold. Which means if you are spending Rs. 100 today, you will need Rs. 760 for the same expenses (assuming the expenses have not increased). Some facts which are I learnt were that India lags far behind in the following aspects:
- 78% Indians lacks sufficient funds for comfortable retirement
- Retirement funds account for only 12% of one's total savings
- < 8% of the working population covered under private pension plans
- Only ~ 97million subscribers covered under EPFO and NPS schemes
Did you know that only 15 % or 1 in every 7 of those who are in the age bracket of 30-55 years have claimed to have planned for retirement. The biggest reason for retirement planning is to take care of one’s family in the future.
Some of us are procrastinators who keep putting off the need to save money to the next month, year etc. but it is high time we initiate the habit. India does not have any government sponsored social security & thanks to the advancement in medicine, we all expect to live longer. In order to be independent, we need the finances to take care of us. After this session, I’ve definitely made up my mind to start thinking & planning seriously. So, here’s some more information on the process.
Retirement planning involves two distinct phases:
- Accumulation- The phase when you build retirement assets. Just save aside a little every month from your income & see your investment appreciate over time.
- Distribution- The phase when you use retirement assets.
We are all used to the traditional methods of savings- Fixed deposits, savings accounts, PF, PPF NSE etc. These not only give a low rate of interest, but also have a tax implication. However, investing in an income oriented fund, not only gives a high return but also is tax efficient. Savings are important but planning your savings is more important.
At 7%, Rs. 5000 will grow to Rs. 61 lakhs
At 15%, retirement assets will grow to Rs. 3.46 crores.
Higher the corpus, greater is the income & higher the returns, better the annuity.
Gradually, retirement planning will be recognized as an important financial goal. At the moment, it is considered important but not urgent by most youngsters. So, ask yourself, "Are you working for money or are you making money work for you?”
A big thank you to Reliance Capital Asset & BlogAdda for so many insights. The session was followed by a lip smacking lunch organized especially for us. :)