Different stages of life require different forms of investment planning. The way you invest when you are young cannot be replicated when you are retired. For instance, when you are young you can take risks and invest in riskier assets with better return potential, albeit in the longer run. Nevertheless, once you have retired you require a different approach to investing given the fact that your priorities change. During your accumulation phase or before retirement you invest to amass wealth for retirement. Your priority is to accumulate more and more and invest in securities that have better return potential. However, post-retirement it becomes more important to protect your capital and income generation takes precedence to the growth of your capital.
Retirement Portfolio
This also demands a change in approach to investment with a fresh outlook. Building a stable income source without taking much risk becomes important for retirement planning. One of the most conventional ways of building such a stable portfolio is to divide your retirement corpus into two broader asset classes – equity and debt – in equal proportion. After this you decide on the sub-asset class, as for example, large-cap, mid-cap fund or liquid or money market fund, which will depend upon your risk profile. Once you have decided and invested, you can start a systematic withdrawal plan from this corpus. The amount that has worked for many is to use 4 per cent of your year-end corpus. Studies elsewhere have shown that this will help your fund to run for 30 years.
Diese Geschichte stammt aus der March 29, 2021-Ausgabe von Dalal Street Investment Journal.
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Diese Geschichte stammt aus der March 29, 2021-Ausgabe von Dalal Street Investment Journal.
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