Have you figured the golden era of your life? Yes, we mean retirement planning. An era where you are liberal from all the weights of work and family responsibilities. An era where you have the time to pursue your passion truly. But to live a comfortable life post-retirement, you should ensure that you have a substantial retirement fund in your kitty. While planning for one’s retirement, investors often make grave mistakes that can hamper the desired result or retirement corpus. This article will throw light on these mistakes that can easily ruin your retirement planning and goals. Read on to avoid these mistakes.
- Not creating a retirement fund in the first place
Often investors don’t save for their retirement assuming that their EPF (employees’ provident fund), PPF (Public Provident Fund), and insurance would be enough to satisfy their post retirement needs. These investors couldn’t be more wrong.
- Investing without a plan
One of the biggest investment blunder made by investors is saving without a fixed financial goal in mind. Experts suggest investors to separate their retirement fund from other financial goals and creating a goal-based plan to achieve it. Understand the importance of investing and begin your financial planning today.
- Starting too late
When you delay your retirement planning, you lose out on the potential years to earn more money. Not only that, the power of compounding works best when invested for a longer duration. So, the longer you stay invested, more corpus you would attain by the end of the tenure. Experts suggest saving for your retirement right from your first paycheck.
- Being burdened in debt
Being in a serious debt when you don’t have a stable income could be a major problem. It is always advised to live within your means, and if need be take loans only for necessary expenses such as education loan, home loan, etc. Ensure that you pay up your EMIs as soon as possible.
- Failing to understand the right investment option
With so many types of investments available to an investor, an investor might get confused about where to invest money and ultimately invest in an option that is not suitable for their financial objective. Understand the several investment options available to create your retirement corpus such as mutual funds, PPF, NPS (National Pension Scheme), ELSS (Equity-Linked Savings Scheme) are some of the popular retirement planning options in India. You can make either an SIP investment or lumpsum investment in these options.
- Ignoring the fine print
Lured by significant returns and wealth creation, investors often forget to read the fine print in between investments and miss out imperative information. Ask your advisor to explain you all the nitty-gritties of investment such as risk level, lock-in tenure, liquidity, expected returns, etc. to make an informed decision.
- Plunging into your retirement fund
When in dire need of cash, several investors choose to liquidate their retirement investments. They think that since retirement is far concept and they need to focus on the problem in hand, this is the right thing to do. However, experts frown upon this ideology. Resist from touching your retirement corpus, unless absolutely necessary.
Remember, with investments, ‘one size fits all’ do not really make sense. So understand your requirements and invest accordingly. Happy investing!