Failing to Plan is Planning To Fail
CEO, Ultimate Wealth Managers (P) Ltd.
February-2015; Money Wise;
Given the nature of our busy schedule, we at times forget to plan most critical things in our life. Forgetting a few things is ok but not all.
87% of Indians don’t plan for retirement.
73% of Indians do not have adequate insurance.
93% never invested in Equity.
82% do not understand what Mutual Fund is.
91% believe that government guarantees the capital and returns on bank FD’s.
Whether or not we plan for other goals during our work life, Ignoring or being lethargic / ambiguous when it comes to planning for post retirement life can hinder our smooth living on medical grounds. Both Health and wealth are inter linked. If I am wealthy, I can face any situation. On the contrary, If I am healthy, I can continue to earn to augment the recurring expenditures.
When age starts catching up, while expenses continue to remain “K” against the income, that gets depleted due to tax and inflation. Here there is always a myth going around. It is the misconception about the necessities of facing any capital expenditures like marriages or education or building a home or having a plan to tour alien destinations. But in the process I tend to forget about the necessities arising out of medical exigencies. It is highly disturbing to comprehend with the menacing inflationary erosion and its impact on rupees value.
The irony here is, the inflation on medical and its related treatment in any form has been all time high and it is pegged at 22%. It is here we realize the necessity of a full-fledged retirement plan to meet our any unforeseen expenditures on this count.
Assuming that your current monthly expenses are Rs.25000 and you expect to retire in the next 20 years. If you consider the rate of inflation at 6% p.a., you will need to build a retirement corpus of Rs. 1.52 crores to maintain the same standard of living. Here’s what you need to do to build your retirement corpus – You will need to invest Rs. 10200 per month at annual return of 15%, in order to enjoy your golden years.
The process that one has to follow is a below:
1) Proper Asset Allocation – We do a complete behaviour ( Money Management ) analysis of our client and plan an asset allocation model for them
2) Periodic review and Re-balancing of the portfolio.
3) Budgeting – You have an option of saving and spending or vice versa.
4) Healthy Leverage.
5) Never Speculate.
6) Proper Diversification
7) Never be Greedy
8) Stick to your plan-Have patience – Goal based approach
9) Insure adequately. (LIFE and Health)
10) Invest Regularly. There is never a Bad time to invest and there is never a good time to speculate.
SIP is the best way to create long term corpus and adopt asset allocation for your lump sum investments to reach your goals.