There is a big fuss created around Retirement Planning. You see so many Ads about retirement planning. Most of the ads are made by ULIP company. We see so many storytelling ads (about retirement planning) about child asking his Dad what will happen to me when you are not there. Story is good and it is sending good message that we need to plan for future financial goals in advance. We need to also plan for financial emergency which might happen in future.
So everybody draws a conclusion that retirement planning is essential. We need to save. But nobody knows how much to invest and how much to save. Nobody cares to define their financial goals. Certain goals are defined. But either near term goals or directly retirement goals and no plan in place to achieve the same.
Once I was discussing with one of my company colleague. What you are doing about retirement planning. I was surprised to find out that he did not have any concrete retirement plan.
As such for everybody finance is a complex topic even for those from finance field.
If I ask anyone what you are doing about your retirement planning, everyone says we need to do something. But everybody keeps postponing the activity as such does not feel the priority.
Priority is the key for Retirement Planning but investors lack resources.
Even if a person gives priority to Retirement Planning. He does not find a good financial adviser who can give him unbiased financial plan.
Everybody is after the commissions.
I know many people who have purchased so many Insurance policies just to save tax. Primary objective of investment is to save tax. That’s incorrect approach.
Also they thought insurance policy is the best investment option. Most of them have purchased due to selling pressure from the insurance agents.
Investment/Insurance agents exploit low awareness of the investor to sell them wrong products.
I don’t say good investment advisors are not present in the market. They are there. But there is a problem with the Investors. They are not ready to pay for their advisory services. Providing investment advice takes good amount of effort, analysis and time.
Also a good investment adviser needs to be aware of all the financial aspects of investment. He also should be aware about Tax planning. Should know risk assessment. So investment advisor has to be a knowledgeable professional. Their charges should be paid by investors to get unbiased retirement plan.
Genuine investment adviser plays key role in your Retirement Planning.
If you find one, he will charge fees. Then you state that you get commission from the investment company why you charge fees. Normally this is the argument given by most of the investor. So investment advisers get converted to agents earning as much commission as possible.
And so biased investment plan is born. This way cycle rotates. Based on demand – supply is generated.
So I would like to urge people to respect services given by genuine Investment Adviser. It is much cheaper to pay the adviser fees rather than get blocked with unnecessary investment and insurance policies.
I know a person. I think you may also be one of them. He is paying Rs. 20,000 as policy premium and getting a risk cover of Rs. 1 lac or 2 lac only. It is good to buy term insurance at very low premium and high risk cover. Paying policy premium is like liability. If the premium is not paid on time policy is lapsed.
Very few people will be there who might have purchased the policy keeping in line with financial goal or risk.
So my humble request to all is not to invest in anything without aligning your financial goals and Risks – critical factor for your Retirement Planning.
I hear arguments like retirement is quite far away why to think of retirement planning now. Lot of young graduates who start working at the age of 27 years. They have 33 years for investment period.
Period is very important for investment. People don’t realize the power of compounding.
Just to show you the effect of compounding. If a person invests mere Rs. 2,000 per month for 30 years at an annual interest rate of 9%. At the end of 30 years, can you guess what will be the amount. It is whopping Rs. 36.6 Lacs! Over 30 years you had invested just Rs. 7.2 Lacs.
If you see return on investment it is 409%. That’s huge.
Again 9% is a conservative rate if invested in debt. Since it is a long term investment you can easily invest in equity mutual fund and can earn around 15% return on long term. With all parameters same and return adjusted to 15% we can expect a corpus of Rs. 1.38 crores. That’s huge for a monthly investment of Rs. 2,000/-.
Rs. 2000/- per month turns into Rs. 1.38 crores in 30 years at 15% annual return.
This can happen if you have a genuine investment adviser. Again retirement plan is a personalized one. So we don’t have formula so that one retirement plan can be fit for everyone. Each person’s financial situation is different. Goals are different. Risk taking appetite is different.
An investment adviser is a like a wealth doctor or a financial doctor. You need to mention all your financial situation. The way you explain your health situation to the doctor. That will generate good retirement plan.
Plan chalked out is an individual financial plan. On a high level if you try to see it might appear to be complex.
But our step by step simple approach will take away the complexity from the process.
Unbiased investment advice is guaranteed.
