Gone are those days, when we used to keep our hard-earned money stacked inside the safety of locker in our homes. There are legendary stories about people who could even go to the extent of putting money in their socks driven by the fear of walking into a bank for making a transaction there. Instead of letting our money sit ideally at home, now we believe in making the money work hard to earn interest. Once someone gets retired after a successful professional stint, life becomes pretty difficult. The triumphant feeling of your salary account is credited with a hefty amount at the end of every month cannot ever be adequately compensated with the ‘free time’ you have or other perks of retirement. After retirement, there has always been a feeling of crunch in the steady cash flow, which results in certain self-regulatory restrictions being imposed. We suddenly become extremely careful about our personal finances as every single penny counts. We exercise caution against being overly generous and extravagant with cost-cutting measures to a large extent being practiced to be able to save money for a rainy day.
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Financial difficulties after retirement
As soon as people cross the age of sixty, their medical expenses go sky high. A sexagenarian happens to be likely to fall ill frequently, hence he needs to spend more on health insurance. An escalation to the extent of a thousand dollars in the value of sum assured in an existing health insurance policy costs 35% to 40 % more premium than in retrospect. Some individuals even buy a fresh insurance policy and top it up with the existing one to be able to cover the risk of being plagued with the diseases which were not being adequately circumscribed within the ambit of benefits offered by the existing policy. With a person getting older, his personal expenses keep climbing higher as against his income level which comes to zero. This is where lies the significance of personal investment in life after retirement. When your regular cash flow in the form of salary becomes a reminiscent from the past, it gets recouped with interest earned out of your investment with a potential to make up for your salary, entirely or partially.
Investment is a habit which does not come naturally to most individuals. We, human beings, are engineered to spend as much money as we earn, which leaves us starved of any cash to cover our emergency expenditure either at the end of the month. If this trend continues, we will probably be left at lurch, with no asset tangible or intangible to be lying in our possession even after working all our lives. Therefore, we need to train ourselves against our basic instinct and be ready to practice self-restraint on our reckless spending spree. We need to strike a balance while making an estimate of the extent to which both the monthly expenses and saving will be adjusted against each other. There has to be an exception in a few months, rising out of the unavoidable circumstances, which sends the state of equilibrium between expenditure and investment, out of proportion. To cite an example, if your marriage anniversary coincides with the birthday of your wife in the same month then you are most likely to end the month with minimal savings, as you would mostly be gifting her twice. This is how life will continue to create obstacles in your way to achieve financial balance more in terms of being able to maintain a portfolio of savings and investments in a well-measured proportion. We need to constantly deliberate over the possible ways and means to factor those unplanned exceptions into our rigorous investment regimen to ensure a zero-tolerance to any sudden shift in the trend. Yes, it is easier to be preached rather than to be done. But months of due diligence and having a sincere commitment towards balanced financial habits could make you imbibe the habit of investing which will eventually turn out to be an integral part of your financial decision making.
Plan and execute to live a comfortable life
Advanced planning is sacrosanct when it comes to taking adequate and comprehensive preparation to live life independently on your own terms, even after the retirement. Planning for retirement starts as soon as someone embarks on his professional career and start earning salaries. You are required to be very specific about the investment instruments that you want to incorporate into your investment portfolio. One should have a diversified portfolio with a perfect balance of yield and risk. Yield is always needed to be enhanced with low risk and risk, on the contrary, is best to be diminished with the maximum of yield. In investment, there could never be something which is tailor-made to fall perfectly in shape with your defined requirement. Instead of putting all your corpus retirement fund in one particular area of investment, it is always better to go for a combination of multiple options to have a diversified portfolio which may yield you, a better return with minimal risk.
Investment consultants have now become pretty relevant in our time. They take you through the probable investment options around you and also guide you over choosing the right mode of investment in line with your financial objectives to be achieved over time. They also caution you against spurious investment options. Cryptocurrency guarantees astronomical. But if we ask our consultant should I buy bitcoin, 4 out of 5 investment consultant will discourage us to invest money in bitcoin as it is an extremely volatile area of investment, with the high risk involved. Mutual Funds promise good returns if you keep investing for an appropriate time.
Therefore, no matter how far are, from your retirement, you should start your investment planning from today itself, if you did not yet have plunged into it. It is better late than never.
