It is important for everyone to do a proper planning when it comes to retirement and sort out finances since having a steady income even after retirement could become a major concern. Retirees often have to seek one way or other to achieve a steady flow of income to live a relaxed life and meet their financial demands. In some cases, early retirements, low rates of interests or failed plans can hamper in meeting financial demands which could cause quite unsteadiness in life. In this article, we discuss how to work towards making a good retirement plan for yourself.
National Pension System (NPS) Scheme
If you are willing to invest in a good plan to save up for your retirement, National Pension System Scheme (NPS) is a good option to look for investing. National Pension System Scheme is launched by Government of India and is regulated by Pension Fund Regulatory and Development Authority (PRFDA). It is safe mode of investment, offers tax benefits too. It offers premature withdrawal under certain conditions. It also allows flexibility of choice too by with two choices of investing namely auto choice and active choice. Auto choice is known to be a default choice for account holder(s) where fund investments are managed with the help of an appointed manager by considering account holder’s age profile. Also, the individual has an option to choose among the available asset classes in which to invest. They can also assign different percentages of contributed funds to be invested in with maximum cap of 50% Equities and also have a choice to switch their manager under certain terms and conditions.
Public Provident Fund
Public Provident Fund (PPF) is a very popular scheme in the country. Public Provident Fund offers a long-term investment of around 15 years. PPF generates a steady flow of income through good returns. Account can also be opened on behalf of a minor. PPF is backed by Government and therefore involves very low risk. PPF enjoys benefits of tax exemption. PPF also offers liquidity.
Fixed Deposits (FDs) are a safe mode of investment offered by many banks and post offices Fixed Deposits offers low liquidity. Longest term for Fixed Deposits (FDs) is considered to be permissible till 10 years. Some banks offer higher rate of interests to their senior citizen members. Minimum term for Fixed Deposits is 7 days. It is advised to compare Fixed Deposit rates with different tenures of bank to check what option is suitable to your objective and could produce better returns.