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Kotak Lifetime Income Plan
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A retirement plan ensures sufficient financial coverage & it's crucial to prioritise your long-term investments when you're investing for your retirement years. Read to know more.
Making long-term investments with an eye on a happy and financially stable retired life requires combining the right strategies and a balanced portfolio. So let’s read further to get clarity about retirement goals, strategies, and the right products to choose from.
1. Set Realistic Goals
While everybody can achieve financial independence, appearing in the Forbes 50 wealthiest list can be a long shot for an average person. So, be realistic and set yourself achievable targets.
For example, you can set a realistic goal of travelling the world after retirement or set possibly unrealistic goals like travelling the world on a chartered plane. Know the difference.
2. Unleash the Power of Compounding
If you can fold a paper of 0.1 mm thickness forty-five times, it will be thick enough to reach the moon. That is the astonishing power of compounding. It can work more astonishingly in multiplying your wealth over time. You need to stay invested for the long term.
3. Diversify your Investments
You are always one news away from a financial disaster if you put all your money into one investment product. Instead, diversify your investments across various investment products to reduce your risks and enhance the chances of good returns.
1. Traditional Investment products
The bank fixed deposits, the post-office deposits and the public provident fund comprise a large chunk of the traditional investment products.
Your money is completely safe with these products.
The rate of returns is diminishing at a constant rate. Therefore,
2. Mutual Funds
Mutual funds invest your money in the stock market. The rate of return is directly proportional to the performance of the stock market.
You can potentially get spectacular and inflation-beating returns on your investments.
Your investments are subjected to market risks. If not done right, the risk can far outweigh the potential returns.
Annuities are insurance products that guarantee a regular and fixed income after retirement.
You can get a fixed pension regardless of market conditions or prevailing bank interest rates. Some forms of an annuity can guarantee a lifetime of pension. Hence, there are few chances of outliving your investments.
Generally, annuities do not come with periodic investment options. You need to buy in lump sum amounts. The rate of return is also among the lowest.
There are no clear winners or losers. All investment products are designed to serve a pre-defined purpose. As discussed previously, diversification is the key. Diversify your investments across various products and keep changing your percentage of allocation at regular intervals.
More importantly, it’s crucial to prioritise your investments when you’re investing for your retirement years. The priority should be securing your and your family’s future by investing in products such as annuity plans, insurance plans, or any investments that can generate a fixed and guaranteed income post-retirement. Once you have met this objective, you can invest in other tools that come with potentially higher returns but may also come with associated risks.
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