Topic 2: Set Up A Contingency Plan and Invest for retirement
Why a Contingency Plan?
It's always good to be prepared for an emergency. This is why financial planners insist that you stash away some money that can be accessed at short notice. The contingency fund will come in handy if you are faced with unforeseen expenses, such as a medical emergency or losing your job. The size of this fund depends on your financial situation. Ordinarily, financial planners suggest that their clients put away at least 3-6 months' living expenses for this purpose. However, your job is secure and you have enough sayings, you can make do with even 1-2 months' expenses.
The money need not idle in a savings bank account, earning a piffling 4%. Instead, There are flexi deposit accounts in banks, where any sum above a specified limit flows into a fixed deposit to earn higher interest. Your money will earn the interest applicable to fixed deposits and will be available to you whenever you need it.
Open An Account For Retirement Planning
A recent survey shows that Indians start saving for retirement only after 40. However. The there are most tax-efficient debt option today. The investment gets you tax deduction under Section 80C. The interest it earns every year is tax-free, and so are the withdrawals. It has a lock-in period, which makes it an ideal tool for long-term goals such as retirement.
This all-time favourite of Indian investors has changed in recent years. One, the interest is no longer fixed and is linked to the bond yield in the secondary market. The rate doesn't change on a day-to-day basis: but is announced every year in April, based on the average bond yield in the previous year. The 10-year bond yield had fallen earlier this year. But the recent RBI action to buoy the rupee has pushed it back to above 7.25%. Consequently, the PPF rate, which is 7.9% for the current financial year could recede next year. So, set up an account and ask your advisor to suit best to your retirement needs!
It's always good to be prepared for an emergency. This is why financial planners insist that you stash away some money that can be accessed at short notice. The contingency fund will come in handy if you are faced with unforeseen expenses, such as a medical emergency or losing your job. The size of this fund depends on your financial situation. Ordinarily, financial planners suggest that their clients put away at least 3-6 months' living expenses for this purpose. However, your job is secure and you have enough sayings, you can make do with even 1-2 months' expenses.
The money need not idle in a savings bank account, earning a piffling 4%. Instead, There are flexi deposit accounts in banks, where any sum above a specified limit flows into a fixed deposit to earn higher interest. Your money will earn the interest applicable to fixed deposits and will be available to you whenever you need it.
Open An Account For Retirement Planning
A recent survey shows that Indians start saving for retirement only after 40. However. The there are most tax-efficient debt option today. The investment gets you tax deduction under Section 80C. The interest it earns every year is tax-free, and so are the withdrawals. It has a lock-in period, which makes it an ideal tool for long-term goals such as retirement.
This all-time favourite of Indian investors has changed in recent years. One, the interest is no longer fixed and is linked to the bond yield in the secondary market. The rate doesn't change on a day-to-day basis: but is announced every year in April, based on the average bond yield in the previous year. The 10-year bond yield had fallen earlier this year. But the recent RBI action to buoy the rupee has pushed it back to above 7.25%. Consequently, the PPF rate, which is 7.9% for the current financial year could recede next year. So, set up an account and ask your advisor to suit best to your retirement needs!