[Voodooblaster]

Originally Posted by Fx14

For fixed returns that are also tax free, there are Tax free PSU bonds to consider. They are listed on the stock exchanges.

Yields would depend on the price at which purchased.

I was in two minds regarding this. Most of these bonds are having long maturity periods.
If my understanding is correct,these can be sold on the exchanges before maturity. However the gains may be taxable.

[Fx14]

Originally Posted by Voodooblaster

I was in two minds regarding this. Most of these bonds are having long maturity periods.
If my understanding is correct,these can be sold on the exchanges before maturity. However the gains may be taxable.

IMHO these would be better than annuities for sure, where one is locked in for long tenures with low taxable returns.

From a retired person's perspective, locking into fixed tax free returns for a longer tenure may be more desirable, given the current reducing return rates.

That said, it is possible to select issues with shorter maturities, if desired. IIRC there are some available that would start maturing 2023 onwards.

In case of unforeseen exigencies, selling on the exchanges would also be possible, though Capital gains (if any) would be taxable.

[knrn]

A very aptly written thread.

We generally don't tend to think about these when we are young only to be shaken and stirred when the time comes. Surely is an eye opener.

The importance of adding nominees and closing undue credit cards and accounts can't be overemphasised. So is the will.
I would like to add that even a hand written will duly signed even on a simple piece of paper carries equal importance. This happened to me after my father's recent demise. He had a terminal illness and in the last year itself he closed all his loans, credit cards and added me as nominee or joint account holder in all his investments. He even left a handwritten will which was greatly helpful for getting the remainder accounts. I was hit. Hit hard and below the belt when my father expired but thanks to what he did a month before his demise in his infinite wisdom, was helpful. Mothers usually have no idea.

Please anyone reading this- make it a habit to talk to your father regarding investments and handling of dues. Tell them the importance of writing a will as it helps. I am the only son so it was a little easy. If one has siblings it becomes a hassle to get all these products, properties, accounts and ppf s transferred.

Last but not least- spend time as much as you can with your parents. You do not know how much they and you both will cherish these times later.

Getting funds transferred and nominated is a big hassle as I found out very painfully but since my father had done most of the work it worked out fine. Still was tough.

I thank you for the thread. It got me quite emotional. I might have deviated off topic a bit but I had to go through a lot to handle everything. Just shared my experience.
Thanks once again.

[HKap]

For people that are 5-10 years away from retirement, something like a HDFC Sanchay scheme might be interesting. It basically doubles your money in 10 years and the returns are tax free. Also, there are multiple payout options. Yearly, lumpsum and also a combination. It also provides life cover. I'm evaluating this option. ( I'm not anywhere close to retirement though).

[Jaguar]

Originally Posted by Voodooblaster

Bank Deposits

Deposit Insurance and Credit Guarantee Corporation (DICGC) which is a wholly owned subsidiary of the RBI insures all bank deposits, such as savings, fixed, current and recurring deposit for up to the limit of Rs 5 lakh per bank.

Noob question. Are Pvt Multinational Banks like Standard Chartered, HSBC, and Co-operative bank accounts covered by this insurance?

[Fx14]

Originally Posted by Jaguar

Noob question. Are Pvt Multinational Banks... and Co-operative bank accounts covered by this insurance?

Yes. Provided they have paid the applicable premium (which they normally do).

[snan]

Great thread and lot of very relevant information. While I agree with most in there, I' d suggest not to go for any kind of annuity deals. And also not to mix insurance and investment ideologies. Hence also the logic of not buying into LT ULIPs / or any kind of whole of life policies. Life insurance should be pure term cover and anyways retirement is too late for term cover.

Annuities can be simulated through a mix of Dividend payout mutual funds which will turn out to be much much cheaper. And you've full control of how much risk appetite you take and accordingly fix the debt-equity portions in the portfolio ; for retirees better to stick to safe bonds (e.g. treasury) and large cap equity MFs. And if you think you do not have the expertise or time to do that, go for a financial advisor who is a fee- only financial advisor and do not sell any product.

[pugram]

Thanks for a nice thread.

One more option I came across, which requires help of a financial advisor, is investing in Mutual Funds till the retirement age and then setting up an Systematic Withdrawal Plan (SWP) depending on how much you require at that time. Of course market risk is involved. Advantage here is that your principal is not locked and if the advisor is shrewd the funds can be moved to the most efficient fund. It is also said this method is tax efficient.

I am somehow not convinced by these annuity plans as they lock your funds and the payout is around the general interest rate provided by Banks.

[GRAND23]

Nice thread.

I am now 35 years of age. I made a decision regarding my retirement around 4 years back. I browsed through lot of sites to understand what is the best retirement option I should choose. After several readings, I decided to go with lesser risk and guaranteed returns.
So I decided to go with VPF (Voluntary Provident Fund). I did some calculations and was happy with this. I decided to go with the simple formula for good returns.

Formula is contributing equal amount of EPF (Employee Fund).
That means, if you are contributing 5000/- Rs per month for your EPF, then you additionally contribute 5000/- Rs per month. So total contribution would be 10000/- Rs per month + Employer contribution which turns out to be pretty good amount. Generally the interest of EPF will not be too low. Government maintains above 8 percentage and yes, it is guaranteed return and tax free.
I just started this 4 years back and now I accumulated 10 lakhs in my EPF account. If I continue to do so I will reach big number in very short time.
But the catch here is, you should be increasing your VPF contribution parallely as per the increments of EPF and do not disturb your transaction until your retirement. Make sure that you don't go for any claims in between. You will be surprised with the returns at the age of 60. Try quick calculation from the below link.

https://www.personalfn.com/calculator/epf-calculator

[bmw_lover]

Excellent thread

Additions to PPF scheme:

I think the interest rate is compunded semi annually in PPF and also the entire amount invested is exempt from IT scrutiny. So it is a good option for business persons too.

[DigitalOne]

Originally Posted by GRAND23

So I decided to go with VPF (Voluntary Provident Fund). I did some calculations and was happy with this. I decided to go with the simple formula for good returns.

Formula is contributing equal amount of EPF (Employee Fund).

I always had this query about VPF. How do you contribute to VPF? Does the employer provide this option to deduct from salary and deposit to the EPF account? I haven't seen any option from my employer.

[Raghu M]

Originally Posted by knrn

A very aptly written thread.

We generally don't tend to think about these when we are young only to be shaken and stirred when the time comes. Surely is an eye opener.

The importance of adding nominees and closing undue credit cards and accounts can't be overemphasised. So is the will.
I would like to add that even a hand written will duly signed even on a simple piece of paper carries equal importance. This happened to me after my father's recent demise. He had a terminal illness and in the last year itself he closed all his loans, credit cards and added me as nominee or joint account holder in all his investments. He even left a handwritten will which was greatly helpful for getting the remainder accounts. I was hit. Hit hard and below the belt when my father expired but thanks to what he did a month before his demise in his infinite wisdom, was helpful. Mothers usually have no idea.

Please anyone reading this- make it a habit to talk to your father regarding investments and handling of dues. Tell them the importance of writing a will as it helps. I am the only son so it was a little easy. If one has siblings it becomes a hassle to get all these products, properties, accounts and ppf s transferred.

Can't agree more on this. Will share my experience.

My great grandfather bought a piece of land and constructed a simple house on it. He passed away without writing a will and my grandfather lived there for a while and later vacated as it turned out to become a busy commercial space (area). He renovates the existing structure to accommodate some shops. Everything is going great, one day he passes away and my father starts to manage the property. Now looking at the current market value which was running into a few crores, we decide to either develop the property with the help of a builder or dispose it. Now, this is where the real problem started. My father did not have the required documents to prove that the property is indeed ours. Luckily no one else claimed ownership so there was no legal dispute. We needed a bunch of documents just to prove that it indeed belonged to us. To get the documents, you need to visit at least 5 to 6 government offices right from the Surveyor to MRO to Municipality.

The actual problem started with my great grandfather not writing a will and distributing his property to my grandfather and his other son. Then my grandfather did the similar mistake of not writing a will or trying to gather the original documents. The interesting fact that came to light is, the property which is well over 100 years was actually registered with the Madras Princely State. This made the situation all the more complicated. We had to literally work through for 3 years to get the documentation right and get it registered on our names as my father wanted to distribute the property to us equally.

No builder or buyer was ready to come forward and buy the property as the first question they would ask is - can we look at the property documents please?

I would suggest everyone select a nominee whether it is for a simple bank account or a mutual fund. I have my wife as nominee for my residential properties, bank accounts, mutual funds, life insurance and term insurances. I will also have a will written and get it registered and keep it updated at least once in 5 years. Do not want her to be running pillar to post to prove she is entitled to what I have earned/inherited. The Indian system is still old and heavily reliant on papers and documentation.

Coming to investments, I have looked at mutual funds as a pretty straightforward method to invest my money. I am long term investor and have been investing since the last 3 years. With the pandemic, though my portfolio took a hit, it has since been doing pretty decently. My plan is to invest for another 10 years and then call it quits. Most of the risk in mutual funds is between the 2 - 5 year period. That is where most of the investors either drop or redeem their funds. Once you move past 5 years provided you put your money in the right fund, there returns are pretty good. I plan to retire somewhere around 2030 and then maybe do what I enjoy.

[GRAND23]

Originally Posted by DigitalOne

I always had this query about VPF. How do you contribute to VPF? Does the employer provide this option to deduct from salary and deposit to the EPF account? I haven't seen any option from my employer.

All you have to do is, send mail to your company finance department regarding VPF contribution. From next month salary, you will see that your VPF amount deduction. The beauty is you got choice to increase and decrease your VPF contribution anytime. Additionally, you can check in EPFO portal for statement.

[kavensri]

I have been contributing to VPF since the day I started my career (July1998). And as our company has a PF trust of their own. So the maximum amount that I can contribute to VPF is limited to 28% of the basic. If it is not private trust, then the maximum contribution is 100% of basic. I have already done partial withdrawn from PF twice and still I have accumulated substantial lump sum in my account. And I am still 5-10 years away from my retirement.
So, my point is, VPF is kind of under-estimated investment plan. Many people would not realize the potential as the contribution to VPF fetches the same interest as EPF.
Apart from VPF, I have been investing in these government schemes.
1. PPF (two separate accounts) and that too by depositing 1.5l in each of the account before 5th of April.
2. Super Annuation from company (15% of Basic per month)
3. NPS- employer’s contribution of 10% of basic per month
4. NPS - self 50000 per year to avail the tax benefits
5. SSY (1.5l per year)
6. APY (my wife’s name) which fetches 5000 pension per month after she completes 60 years.
7. VVY (15l in my mother’s name_ which is fetching me 1.2l per year.
8. 3 LIC Pension Plans (Jeevan Shanthi and Jeevan Akshay)

[V.Narayan]

A first class topic to discuss especially for members/readers over 30 years of age and most essential for those over 40 years of age. If you are not in Government service be rest assured the uphill climb to adequately save for your retirement is steeper than you think. I say this as one of the very few members of Team BHP who is on the other side i.e. gleefully retired.

Many members and the OP have given suggestions on financial instruments which most will find useful. I won't repeat those pieces. Let me share my experience and I hope it will benefit our readers.

Health Insurance: Take out health insurance for your family & yourself now when you are young(er) and the premiums will be more reasonable. You may have medical cover from your employer but I would still advice you keep an independent medical insurance of your own. Because one day at 60 you will go to the insurance company and either the premium will be way way too high or they may even, based on your health issues, refuse insurance altogether.

Will: Write out a will and get it registered. Less hassles for your folks after you're gone. Also less scope for quarrels.

Debts: Make sure you have paid off your debts before you retire. After you retire on one hand your income is relatively limited but big ticket expenses may still be lurking -- kids marriages, helping kids settled own, at 60 one or more of your parents/parents-in-laws could still be alive and their costs are often on you.

Own your own accommodation: At 70 you will not have the energy or ability to cope with changing rented accommodation constantly like you can at 30. The body ages, the mind slows down, attitudes harden and most importantly you are less 'wired in' and less nimble.

Inflation: The elephant in the room that no one fully understands. Financial advisors will tell you about this. Given India's average inflation over the last 20 years you need to factor in 2.0X to 3.0X for every two decades into the future you are planning for. But the forward date to pick is not 60 or 65 i.e. the age you expect to retire but 5 or 10 years beyond that so that you are earning enough on your savings to lead whatever you consider a comfortable life at 70 or 75. If you aim for 60 then by 70 you'll be at close to half the purchasing power already with maybe 10 or 15 years still to clock. In my case I set the date for age 70 and set a expenditure level that will give me roughly the same standard of living I enjoy today adjusted for the fact that all my kids will be fully independent (or damn well ought to be) and our surviving parents would have passed away. And then applied the inflation factor. Which means I earn today from my savings more than I need and some of that is squirreled away for the post-70 world.

Don't eat away your retirement funds hoping you'll somehow replenish it: Unless you are a 6 sigma outlier you are not likely to replenish after eating into your retirement savings half way through your working life. And if you are eating into what was your retirement savings plan then you don't have the discipline to recoup. So don't kid yourself.

Needless to say make this a joint planning with your spouse

Financial advisors: Most of them are folks who have never climbed the hill themselves. They could offer you the odd tit bit of advice but if you really want to hear the practical side talk to some one who planned well for his/her retirement and has success to show for it.

Don't imitate your parents if they live a frugal life in retirement: Your earnings, your standard of living is probably higher than that of your parents at the same age or even today. Unless you are strongly inclined to a frugal life it is very very hard to adopt to it at 60. So plan for maintaining a life style similar to what you have at 45 years of age when you are approaching your peak.

And finally what is retirement? For many of us there is and will be a second career. I prefer the phrase golden career (i.e. a career in your golden years) - more fun, less stressful, satisfying and flexible.

Then there is the whole piece of giving back to society but that is a different topic altogether