Sunday, September 28, 2014

Regular Income during Retirement

 

Regular Income during Retirement

The assured returns of NSC can help create a regular income during retirement, but it might not be enough

 

The assured return on NSC can be used to create a regular income ladder for retirement. Certificates can be bought every month for appropriate denominations, which on maturity act as a steady income stream.

 

However, fixed income alone cannot protect his funds from inflation. If he has many years to retirement, he will need to invest in equities too. You did not mention your friend's age or the stage of life he is in. Therefore, we can think of three scenarios. First is that he already has equity investments and as he is nearing his retirement, he is utilizing NSC to lock into returns generated so far, for guaranteed returns on retirement. If this is the case, this plan seems perfect.

 

Another case could be that he has just started saving for his retirement. In this scenario, he has a difficult task on hand and he needs to re-plan in order to beat inflation. He must invest at least 10% of his portfolio into equity funds to earn higher returns. Likewise, he must start SIP in a well rated balanced fund and buy NSCs for remaining amount every month in the same manner as proposed earlier.

 

A third case may be that your friend is young and willing to save for his retirement. In this case, he must invest into diversified mutual funds too as he has plenty of time in hand to save for a rainy day. He can opt for an asset allocation whereby he invests at least 60 per cent of his savings in diversified funds and the rest in fixed income options like NSC.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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