It is one of the most important life events for all of us. You may get pension or annuity as well. You may also receive lump sum retiral benefits like Gratuity , leave encashment , bonus etc. Let us first understand the different phases of retirement planning :. You put your heart and soul to accumulate your retirement corpus so that you can withdraw periodically from it and lead a comfortable retirement life.
Accumulation of retirement corpus is only one part of your retirement planning. So, what are the investment or saving options to invest lump sum amount retiral benefits. What are the possible best investment options to get regular income? What are the best and safest investment options for retirees or senior citizens in India?
For more details on Govt Savings Bond Scheme , click here…. Bank or Post office Time Deposits may offer you guaranteed and fixed income, but do note that the interest rates on these deposits can be lower than all the above options and also the interest income is taxable. So, you may avoid opting these. In case, you can afford to take some risk or can invest a portion of your retirement corpus in slightly riskier investment options then you may consider below investment avenues.
You may get attracted by better interest rates but kindly do not invest your entire retirement corpus in these investment options and even if you are investing a portion of your corpus, do consider investing in multiple deposit schemes or Issues which have good credit rating. Do note that these are not completely risk-free. You may consider below options which are tax-efficient especially if you are in higher tax-bracket and if your investment objective is to get better returns with moderate risk.
Kindly note that returns are not guaranteed on Debt mutual funds and you may lose your capital too. Under Dividend option of these schemes, you may not receive the dividends regularly and the quantum of dividend amount may also vary. If you want to receive fixed and regular income, you may consider setting up Systematic Withdrawal Plan on these investments.
So, you need to keep an eye on them. You may have to invest a portion of your retirement corpus in investment options like Equity oriented balanced funds or regular Equity fund to get better Real-rate of return inflation adjusted returns. You need to give importance to both nominal rate of return and real-rate of return. To get regular income, you may have to set up SWPs on these investment options. Kindly be aware of the tax implications as well, as SWPs are treated as normal redemptions.
In a typical mortgage, you borrow money in lump sum right at the beginning and then pay it back over a period of time using Equated Monthly Instalments EMIs. In reverse mortgage, you pledge a property you already own with no existing loan outstanding against it. The bank, in turn, gives you a series of cash-flows for a fixed tenure. These can be thought of as reverse EMIs. If one of the spouses dies, the other can still continue living in the house. If both die, the bank will give their heirs two options — settle the overall outstanding loan and retain the house, or the bank will sell the house, use the proceeds to settle the outstanding loan and give the rest to the heirs.
Sreekanth is the Man behind ReLakhs. The main aim of his blog is to "help investors take informed financial decisions. These should not be construed as investment advice or legal opinion.
Kindly clarify is it right or wrong to get deduction for next years. For which I shall be very thank ful to you for clarifications. You will be eligible to claim deduction of Rs 1.
Can you suggest whether it is worth investing in Tax Free Bonds in Secondary market? If recommended, how do I choose a plan to invest? But, most the bond prices are above Face value and hence the yields can be on the lower side. You can find the list of bonds moneycontrol link.. If the market takes a turn for the worse after you invest, your portfolio could take a big hit, but more of your money will be able to grow or compound when you invest it as a lump sum. Consulting with a financial advisor can help you determine your level of comfort with risk and whether or not you should invest the lump sum all at once.
Mutual funds are one way to invest a lump sum in retirement by pooling financial investments from its investors and using that money to then purchase securities. These securities can be in many different investments along various avenues including stocks and bonds.
Also known as holdings, securities make up what is known as the mutual fund's portfolio. Mutual funds are popular lump-sum investments for lots of reasons, including their high level of liquidity. You can redeem your shares whenever you'd like for the current net asset value, or NAV, but bear in mind, however, that you will likely face redemption fees which vary depending on the investment company. Mutual funds are also an affordable way to diversify your portfolio. Because mutual funds invest in many different companies across many different industries, your risk is spread out should one company experience a downturn , and many mutual funds have low initial investment requirements.
As with any type of investing, mutual funds do carry a level of risk. Even though mutual funds are diverse enough to weather some financial storms, you need to be aware that you could still lose a portion or all of your investment if the securities or holdings in a particular mutual fund should experience a downturn.
Check a fund's past performance to get an indication of how stable it has been and exercise caution when investing in funds that have exhibited excessive past volatility as this is indicative of an increase of risk. Another popular choice for retirees looking to invest a lump sum in their retirement years is the immediate annuity. Annuities are an insurance product purchased from insurance companies and provide long-term stability. While there are several different types of annuities available, the immediate annuity lets you make a lump sum premium payment for a policy in exchange for guaranteed distribution payments.
These distribution payments can last for 10 or 20 years or for as long as you designate, even for the rest of your life. Annuities funded by tax-deferred accounts are only taxed on the distributions as you receive them , rather than all at once.
This allows more of your money to grow tax-deferred until you begin taking distributions which means that more of your money can be put to work for you. Pages may include limited notes and highlighting. May include library labels. Accessories may not be included. Publication Year:. Trade Paperback. Publication Name:. Item Height:. Anthony Gallea. Item Length:. Prentice Hall Press. Item Width:. Item Weight:. Number of Pages:. About this product. Product Identifiers Publisher. Product Key Features Author.
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