It is the innate desire of every individual to have a peaceful retirement life. However, to enjoy the life you envision for yourself, you must plan your finances well and accumulate a large corpus that you can use in the golden years of your life.
Retirement planning is not as difficult as it may seem. One of the best ways to create a retirement fund is to create a portfolio with investments in different financial products that generate returns and provide a steady source of income post-retirement.
A few investment options you can consider in your portfolio are discussed below to enjoy a comfortable and financially independent retirement life.
Mutual funds
Over the years, mutual funds have emerged as one of the most popular investment vehicles among retail investors. In mutual funds, you can either invest a lump sum amount or take the SIP (systematic investment plan) route, where you can invest a small amount periodically in different funds of your choice.
If you are a first-time investor, it is better to consult an expert financial advisor who can guide you and mentor you through the investment process. The key to being successful in mutual funds investments is choosing suitable funds and being aware of the market condition. It is an excellent way to build wealth for retirement over the long term.
NPS
National Pension Scheme is another popular retirement plan that provides regular income in the form of pension post-retirement. In NPS, you invest a small amount in your NPS account throughout your working years. When you retire, the scheme provides you with a fixed income every month from the accumulated corpus.
It is a government-backed voluntary investment scheme that allows you to generate market-linked returns. When you subscribe for NPS, the money is invested in different asset classes like equity mutual funds, government bonds, stocks, debt mutual funds, etc. The fund manager takes the investment decision based on your risk profile and financial goals.
Another significant feature of NPS is that it enjoys EEE (exempt-exempt-exempt) tax status. The amount you invest in NPS is eligible for tax benefit up to Rs. 1.5 lakhs under Section 80C of the IT Act. Also, the returns you get from your investments and the maturity amount you receive are tax-free.
PPF
Public Provident Fund is a popular and excellent investment option that everyone must have in their portfolio for retirement. One of the most significant benefits of PPF is that it gives fixed returns. And, since it is a government-backed scheme, the investments in the PPF account are safe and secured.
Also, investments in PPF are quite affordable for all. You start investing in PPF with as little as Rs. 500 per month, and you can open a PPF account with any bank or post office. It is also an excellent investment option from the tax benefit perspective. The investment amount, the maturity proceeds, and the returns you earn are all tax-exempt.
Final Word
Apart from the above investment options, there are many other investment plans where you can invest for a comfortable retirement. Irrespective of the instrument you choose, make sure you know everything about the instrument, its features, benefits, terms and conditions, returns potential etc. and make an informed investment decision.