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It is important for all of us to know the right investment options while planning retirement money investment.

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Where to Invest for Retirement?

Just waking up one day and thinking of investing for retirement would not serve your purpose. Retirement Planning is a well planned process and it needs to be done very diligently. It is important for you to invest your savings in a way that they turn to be fruitful to you than being futile when you enter your golden days.
Retirement Planning should not be neglected and it is important to take serious measures to plan for your nest egg when the paid work ends. It is always advisable to start investing as early as possible in order to secure the life of your loved ones and yourself after retirement.
As you begin saving early, the magic of compounding works in your favor. You cannot solely depend on the pension that you get. You need to have some good money flowing regularly in your account in order to keep you smiling.
There are a number of investment options available in the market but it is up to you to choose wisely from the bouquet of investment plans. Your choice would surely be affected by your spending habits, your lifestyle of today and the one you wish to maintain after your retirement, your risk taking ability, the time that you have in hand before your paid work ends etc.
Investment Options for Retirement
Have a look at few of the investment options that can guide you in building a diversified portfolio for yourself. 
  • Equities – If you are the one who has started off early with your retirement planning then you can opt for equities. Investment in equities provides you with long term capital gains. If you create a diversified portfolio while you opt for equities you are bound to grow your money in the long run.
  • Individual Retirement Account – These are popularly known as IRA accounts. It is advisable to put your money in these accounts as these are tax-favored retirement accounts. You get tax deferred capital gains when you put in your investment in this account. It is just like an investment account where you put in your money and from there you invest in bonds, equities, stocks etc. 
  • Fixed Deposits – If you are the one who wants to play very safe and are close to your retirement year then investing in fixed deposits can be a good option. You can include fixed deposits in your portfolio as they give you attractive returns especially to those who fall under lower tax bracket. 
  •  Mutual Funds – You can always go in for mutual funds that are available with different paying options and risk factors. You can choose funds as per your requirements keeping in mind the risk that you can take, frequency of returns and the amount that you can pay. 
  • Insurance – There are a wide variety of insurance schemes available in the market. You do not have to become a party to all of them but yes few are surely advisable. Medical Insurances, life time covers and Pension Plans can form a part of your portfolio as in the long run they prove to be very beneficial and help you remain secured. 
  • Employee Provident Funds (EPF) – If you are a salaried individual then you cannot ignore the importance of EPF. If you pursue your job for long term, this forced saving can give you a good lump sum amount to be added to your capital gains. If you abide by certain prescribed conditions, EPF enjoys EEE status which says that it is tax deferred.  
  • Public Provident Fund (PPF) – It serves as a retirement planning tool especially to those who will not be having a regular flow of income in form of pension after their retirement. If you wish to open one PPF account for yourself you can do that through an authorized post office anywhere within the country, State Bank of India and few branches of other nationalized banks. The first private bank that was given a green signal for opening PPF accounts was ICICI. Few other private sector banks also operate PPF accounts. The minimum amount that you need to deposit in this account in one financial year is Rs 500 and the maximum that you can put in is Rs 70,000. You can create fixed deposits and earn tax free returns every year. 
  • New Pension Scheme (NPS) – The New Pension Scheme is another retirement planning tool that was introduced by Government of India in 2009. It is also a scheme wherein you put a definite amount of your money and then can invest in various other instruments. You have two forms available in NPS which are – i) Tier – I Account that does not allow any premature withdrawal and ii) Tier – II account that allows premature withdrawals. You get tax benefits and can choose from six investment funds that are available as per your requirement. 
  • 401 (k) Plans – 401 K plans can also form a part of your portfolio while you are planning your nest egg. In 401 (k) plan those employees who qualify for it enjoy tax-deferred contributions. Those employers who offer them to their employees may also make contributions matching the employee’s contribution. The earnings from contributions that employees can make on post-tax or pre-tax basis are tax deferred. If these are held for long term then delayed taxation and compounding magic will work for you. 
Planning your nest egg should not be delayed. The early you start the more sound financial grounds you can establish for yourself and your loved ones. Holding money in accounts would not solve the purpose. However that is also important but you should think of means as per your risk appetite and time that may lead to generation of wealth.
Apart from this you also need to lead a healthy nutritious life so that when you sit back on your rocking chair you only have a pleasant view.

  • dayananda:
    madam i am working in private sector. i need a good saving plan which can b useful to me in my retirement and also for family feature . i have one wife and two kids who were studying in 4th and 3rd std. i am a 43 year old. staying in karnataka . my monthly income is Rs 45000
    24-Aug-2015 03:07 PM