Incomes typically grow till your retirement. Your monthly income might support your groceries and other bills but it is inadequate for large expenses. This is what necessitates investments for your future.

One big and certain investment needed is retirement planning. To know how much pension you would require, you should look up an online retirement fund calculator. This simple tool asks for a few details and gives you a solution to your pension problems. It will ask you for:

● Current Age
● Age when you will retire
● How long you’d want a pension
● Current monthly expenses
● Expected Inflation
● Saving done for Retirement till date

Once you answer these, the online retirement fund calculator lets you know the total sum you require as well as the monthly expenses on retirement. It also tells you how much monthly savings are required to reach there.

But apart from pension, what if you simply want to know the maturity amount of any of your investments? That can be easily found by using the Maturity Amount Calculator.

Feed in the following:

● Principal invested
● Rate of interest
● Period of investment
● Compounding frequency

With the click of a button, it calculates the maturity amount for you.

It’s always good to know the figures that you’re working for, and the figures that your investments will lead to. It works as a great motivation to know all that you can do with that money.

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The best military strategies win because they were pre-planned. No General can maintain a winning record by impulsively taking decisions that could have a long-term impact. The same analogy applies to any sport you practice, and any human achievement that you admire. Planning is necessary for long-term success. And you can define the success of your life with Financial Planning.

But before you plan, you must have a good idea of the current scenario as well as your long-term objectives. Therefore, the first step to attaining your life’s goals is Financial Assessment, which is, How much of your income needs to go into fixed expenditures as well as variable ones, resulting in how much money you can actually save. Once you have these figures, you move on to Financial Planning.

Briefly, there are a lot of financial products that you can invest in. But you must choose only those that deliver your long-term financial goals, such as a vehicle, a home, old-age security and so on. Approach a financial services company, who have experienced professionals to assist you in selecting the right plan for your life.

Once you have figured out the plan --- how much of your savings go into insurance, mutual funds, pension plans and so on --  you can be worry-free for the rest of your life. Not only is your present covered, your future is secure too. Whatever happens next won’t bother you, because it’s all covered under your plan. Get ready to savour your successes, one after another!

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Question: The market is down. Shall I stop the SIP?

Answer: To stop your SIP when the equity market has fallen is the worst possible mistake you can commit. To benefit from an SIP investment, you need to stay invested across market cycles. If you continue with your SIP, you will be able to purchase more units of the Mutual Fund during the downturn. Your long-term returns will benefit from those low-cost purchases. When you stop your SIP, you also flout the principle of asset allocation, which requires that you maintain your allocation to different asset classes at a predetermined level, irrespective of market conditions. By stopping your SIP, you tilt the asset allocation of your portfolio away from equities and towards cash, a decision that will harm your portfolio returns. Going by the logic of asset allocation, you should, in fact, invest more in the equity market when it is down.

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Question: At age 35, my monthly income is Rs. 80,000. My monthly expenses are Rs. 40,000. How do I build a retirement corpus of Rs. 5-8 crore & also buy a health insurance plan for me & my wife?

Answer: To create wealth for a long period is important. Apart from that, you also need to plan your retirement as well as other financial goals for the coming years. Long-term planning requires regular savings, which then results in compounding. The process of compounding  begins when the interest starts earning interest. Its effectiveness increases with the length of the investment period.

For example, a person saving Rs. 40,000 per month for 20 years will earn a principal saving of Rs. 96 lakh. If we assume an average return of 10%, the corpus may become Rs. 3.06 crore  during the same period. The corpus will reach Rs. 4 crore if we assume the average return to be 12% and will touch Rs. 6.06 crore at an average return of 15%. All these figures are obtained without considering any increment in savings. If you assume a savings rate of 5% per year or increase the savings in the same proportion as the hike in your salary, the corpus will cross Rs. 4 crore, assuming an interest rate of 10%. 

This sounds easy but the reality is different. You may earn the targeted interest rate over a long period. However, in between, there would be periods when the earning rate is below the inflation rate, managing which are hard.

The allocation of assets should be done as per the targeted earning as it is higher than the inflation. Select from the asset classes that outperform inflation over a long duration. You can opt for Mutual Funds for long-term investments, but they being a volatile asset class need to be held for a long time. The best way to bring discipline and consistency in regular savings is to choose Systematic Investment Plans (SIPs).

Ensure to have adequate life insurances in order. The insurance amount should be 7-8 times of the annual income of the earning members of the family and this needs to be periodically reviewed. The next in the line is medical insurance. Check all details related to the services covered, immediate coverage, waiting period, network hospitals, sub-limits, co-payment, pre- and post-hospitalisation expenses, no claim discounts, cover ceasing age, and option to upgrade the sum insured before you choose the insurance company.

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Creative: I want to save taxes on Rs. 50,000. Should I invest in NPS or equity MFs?

Answer: NPS is one of the better products available in market in order to plan for your Golden Years. It is usually compared with provident fund. Employees’ Provident Fund (EPF) and Public Provident Fund are considered to be debt-oriented products with fixed returns. As compared to them NPS gives higher returns over the long term due to the provision of allocating 50% to equity in its portfolio. NPS is taken superior to many insurance-linked retirement products too being less expensive and by investment product in nature.

NPS, in comparison to Mutual Funds-oriented retirement solutions has its own merits. The long-term lock-in that NPS has protects an investor from premature withdrawals and the fixed nature of its index-based equity exposure rescues him from selecting between various funds and maintaining a portfolio through the years. Thus, it becomes beneficial for an investor who wants a low-cost, low-maintenance and pure investment retirement product. Mutual Funds offer high returns for disciplined investors and for those who can, either by themselves or with the help of an adviser, manage a retirement portfolio. 

However, investing in NPS or such instruments purely for tax deductions will do no good. The right approach is to first analyse if NPS fulfills your retirement needs or not and if so, use tax incentive as a fillip.

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