Are Retirement Plans A Good Investment Choice?
Updated On Aug 25, 2022
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In India, the proportion of seniors is rising and is predicted to exceed 20% of the country's total population by 2050. One of the rising issues for the ageing population is their ability to save for retirement.
It is crucial that you consider investment opportunities that might help you accumulate wealth for your retirement and guard against the associated impending inflation. Retirees must make the most of a corpus that enables them to reduce their tax burden and generate a steady source of income. To know more about retirement plans as an investment choice, read on.
Why Is Investing A Good Choice For Retirement?
Your income ends when you reach retirement. You will struggle to survive if you lack any savings or assets to fall back on. Additionally, inflation will lower the value of whatever retirement funds you have amassed in savings accounts by the point you require them. To combat inflation, you must choose the best retirement strategy and begin investing in it.
What Are Some Good Investment Options For Retirement?
Following are some good investment options for retirement -
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NPS -
It is a long-term investment strategy for retirement that was developed by the Central Government of India and the Pension Fund Regulatory and Development Authority (PFRDA). A subscriber may make monthly investments during his or her working career, remove a portion in one lump amount, and then invest the remaining funds in an annuity to provide a steady income stream in retirement. The NPS is open to all Indian citizens over 60.
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SIP -
One of the finest methods for investing in mutual funds for retirement planning is through SIP. SIPs are a popular retirement planning tool among private sector workers because they enable cost-effective asset accumulation and compounding. SIP stands for systematic investment in mutual funds. For SIP investments, there is no minimum investment amount.
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PPF -
PPF is a long-term, government-backed investment strategy with enticing returns and interest rates. Any nationalised bank or post office is able to create a PPF account for you. You can begin investing as little as Rs. 500, and the minimum term is 15 years. PPF provides rewards with no risk. PPF investments are open to all Indian citizens, with the exception of HUFs and NRIs (Non-Resident Indians).
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FD -
This is a well-known investing strategy that has been around for a while in India. The long-term account offers guaranteed profits while allowing you to deposit a big quantity of money for a certain amount of time. When the account is opened, the interest rate is predetermined, and it stays that way for the duration. Returns on the account are assured. Senior people are entitled for higher rates of interest that vary from 3.50% to 8.50% compared to normal FD plans.
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Tax-Free Bonds -
These bonds have a long maturity duration of between 10 and 20 years. It performs admirably when compared to debt funds and fixed deposits and is the appropriate retirement investing strategy. For people searching for consistent income during their retirement years, these bonds are advised.
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SCSS -
Offering SCSS, which has a 5-year investment plan, are banks and post offices. You may extend it, though, for an extra three years. SCSS delivers the highest post-tax returns when contrasted with all other fixed income tax solutions. Only seniors and early retirees are eligible for this programme.
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POMIS -
The Finance Ministry's POMIS investment product is incredibly trustworthy. It is a low-risk strategy that ensures consistent revenue creation. You may begin investing in the plan with a Rs. 1500 initial deposit, and it has a 5-year maturity period. To start POMIS, go to the nearby post office. A POMIS account can be opened by any Indian citizen. All investment programmes are eligible for tax advantages, with the exception of POMIS and tax-free bonds.
Endnotes
The decision is not a problem for people who are qualified to contribute to numerous retirement plan types and have the funds to do so. Choosing the best alternative or options might be difficult for people who lack the funds to finance various accounts.
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