How Should Your Retirement Portfolio Look?

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If your retirement is around the corner and you are planning the finances of your golden years, you might be thinking about various investment tools like Senior Citizen Fixed Deposits (FDs), mutual funds, government saving schemes, etc. Apart from knowing the investment avenues, you must also know how to allocate your money in different assets to generate healthy returns and maintain a comfortable life.

Rising cost of living and increased life expectancy have made it even more important to plan and invest for your retirement. Hence building a strong retirement portfolio that can stand the test of time becomes essential. By knowing proper investment channels and how much to invest in them, you can build a strong retirement corpus to fulfill all your financial needs even after you stop earning.

There are various investment instruments where you can park your savings and let them grow for your golden years. Read more to know about how much you should invest in different avenues and how your retirement portfolio should look like.

Invest in traditional risk averse avenues

According to financial experts, you need to be careful with risks while planning for your retirement. So, cutting down on risky market investments and raising safe traditional avenues is one of the main pillars of building your retirement portfolio.

Fixed deposits are one of the safest investment options to grow your savings at a respectable rate along with safety of the principal amount. You can get guaranteed returns on your investment and unlike stock market or commodity market, FD returns are not dependent on the fluctuating market rates. You are assured of a maturity amount at the end of the tenor.

In addition to attractive FD interest rates, you can avail a host of features and benefits with Fixed Deposit. Apart from flexibility of choosing a tenor between 12 to 60 months, you can also choose the frequency of interest payouts. Investing in multiple FDs of varying tenors can build a substantial corpus for you to receive regular income after your retirement.

You can even use the FD calculator to evaluate your returns in advance and invest appropriately to meet all your financial needs after your retirement.

Pension schemes like SCSS, PMVV and POMIS

There are various government backed pension schemes like Senior Citizen Savings Scheme (SCSS), Pradhan Mantri Vaya Vandana (PMVV), and Post Office Monthly Income Scheme (POMIS) where you can start investing your money to receive regular monthly income after your retirement. A small part of your income can be paid as premiums for these policies which come with a lock-in period of 5-10 years.

So, by combining these investments and allocating proper part of investment you can create a healthy retirement portfolio which can help you lead a comfortable life post-retirement. Here is how an ideal portfolio should look like:

Product Approx. return Lock-in period Pre-mature withdrawal Ideal allocation
Fixed deposits 8-9% 1 year+ Anytime 40%
Pension schemes 8% 5 years+ 1 year later 20%
Equity funds 10-15% None Anytime 10%
Debt funds 6-8% None Anytime 30%


Mixed asset of equity and debt

Financial planners suggest that one should cut down on direct exposure to equity and raise debt investment as they approach retirement. You can invest a part of your savings in the market, but the allocation of assets become important. Debt-oriented mutual funds are preferable since they are relatively safer over equity and hence can provide the required stability to your investment.

According to the head of a leading investment advisory company, it is essential to evaluate your monthly financial needs after retirement which should help in creating an ideal portfolio of debt and equity. However, since market investments are prone to risk, it is advisable to opt for fixed-income products like FD over mutual funds.

Photo via Shutterstock

Photo via Shutterstock

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