[kavensri]

Originally Posted by Cooltronics

I would say this is a very inaccurate barometer to invest because the 30% tax benefit for a specific sum of that particular year when extrapolated till your turn 60 is minuscule. [/url]

I don’t know how you calculated this. But my own calculation is showing current ROI of around 31% since I started investing in NPS in 2017. How I calculated is, how much actual amount of NPS deduction has happened from my salary (after considering tax benefits) against the current balance.
For example, if I am paying 10000 per month, then the actual amount paid from my side would be 6880 as I am getting tax benefit of 31.2% of the complete amount. So, when I did the calculation over the period of 3.5 years (2017 Feb – 2020 July), ROI is showing 31.5%.

Originally Posted by Cooltronics

Below is an excellent podcast I heard about NPS - may be you can view it.


https://www.capitalmind.in/2020/01/i...d-the-annuity/

Thanks for sharing the article. Though most of the information is already known to me, some of the things were unknown.
But, even after knowing all those things, I would still like to continue with NPS and I am okay with whatever the drawbacks that have been talked about with NPS.
The reason being, I am very much conservative when it comes to taking risk. So, I would never invest in MFs and SIPs. Even if the returns are on the lower side, I would always look for government sponsored schemes.
I know, this NPS does has a dependency on market (through equity portion), but there also I have selected conservative option.

Couple of things I wanted to clarify from my side.
• This is not the only retirement investment from my side. In fact, I just checked and found that the overall percentage of my NPS corpus (as on today) is less than 4% of my overall corpus.
• I have diversified my retirement investments spread across various schemes. Currently, VPS is having highest corpus amount. And the order for rest of the schemes is like this: VPF>SA->PPF->NPS.

[nitinkbhaskar]

Originally Posted by handsofsteel

What if, a certain fund folds and I lose a major chunk of the earnings over the last 8 years?

Any advice? Is this a common dilemma? What should one do if the find value increases beyond your preset target? Encash and shift/ encash and plough back into other funds/continue investing? Please guide.

As long that the fund houses you have invested in are big names, don't worry about them folding up (exceptions like Franklin are always there but rare). If I would have been in your place, I would continue (if not increase) my SIPs. This way average buying price comes down. And once the market picks up / returns to normalcy one can expect better returns.

On your 2nd predicament - always try to maintain the Debt vs Equity balance. For eg: if you have 25 / 75 allocation to debt & equity (considering you have high risk appetite and long term goals), then any increase in your equity funds should be transferred to debt. You can perform this rebalancing every 6 months.

In short never stop investing as you dont want to break the compounding effect. Just keep on rebalancing as per your needs.

[Voodooblaster]

Originally Posted by SmartCat

GoI has pulled the RBI 7.75% Bonds, and replaced it with "RBI Floating Rate Bonds 2020". As the new name suggests, returns are not fixed but bond holders get higher or lower returns based on interest rate scenario.
https://www.hdfcsec.com/rbi-bond

If one invests now, interest offered during the 1st year has been fixed at 7.15%
https://www.hdfcsec.com/hsl.docs//Pr...2383926573.pdf

Originally Posted by sahil624

A really informative post.
I think the section you want to put here for the additional investment of Rs.50k is 80CCD(1B) which is available for both the salaried as well as self-employed individuals. However, the section 80CCD(2) is only available to the Salaried individuals and is the deduction available for the employer contribution to the NPS with a maximum of 10% of the (Basic salary + DA).

https://cleartax.in/s/section-80ccd

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.

Originally Posted by Raghu M

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.

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.

I have updated the article based on the suggestions and experiences of Fellow BHPians and attaching a PDF file for the same. Please feel free to share it with your near and dear ones. This thread has proved once again that BHPians expertise is not just limited to Automobiles (Though it is our first love)

This is mainly aimed at people in their late 50's and early 60's standing at the brink of retirement

A big shout-out to all BHPians who helped to iron out various niggles in the post and for the Moderators/Admins who had to edit many of my posts multiple times to improve the standard of discourse.

[Sebring]

Dear Mr Narayan, Thank you for all the advise. I have just one question. Is this a good time to retire all loans (Housing and Auto), in case of a cash windfall? Or is this the time to hold on/preserve cash? Covid times are pretty confusing to take such calls

Originally Posted by V.Narayan

But if you or any other member has a specific question I'm sure other members , including me, would be pleased to try and help.

[am1m]

Originally Posted by V.Narayan

It may seem a daunting figure to you today but the Rs 15 crores being spoken of is in 2050 rupees and your income will also inflate with time as you earn between 2020 and 2050.

That is a daunting figure indeed. Is that figure taking in to account estimated big-ticket spends such as children's education and wedding as well? Or just for daily expenses post-retirement?

[Jaguar]

Originally Posted by dipak1406

I am 46 yrs.

Monthly requirement if we consider inflation at 8% till 2030, then at 5% from 2030 to 2040 and 3% from 2040 to 2050 = Rs 182,500 per month

Now if one plans to get Rs 182500 per month in 2050 then retirement corpus will have to be Rs 5.50 crores ( FD at 4% per annum) or Rs 7.30 crores ( FD at 3% per annum)

Considering a person invests 10 lacs in Bank FD or safe Govt instrument and gets 7% for next 10 years and 5% then onwards then he will get Rs 49 lacs in 30 years.

If the same person invests Rs 10 lacs in Mutual Fund for 30 yrs and gets even 9% then his retirement corpus goes to Rs 1.21 crores which takes care of 50% of his / her future requirement.

Since your current age is 46, shouldn't the retirement age be 2040, if not earlier? So, wouldn't the corpus requirement and the time period to reach that figure reduce?

[Gansan]

Any insights in to the FD schemes of some of the Micro Finance banks? Are they covered by the government insurance? They offer attractive rates of 8% or more. Probably one could park a lakh or two each in to some of them?

[Fx14]

Originally Posted by Gansan

Any insights in to the FD schemes of some of the Micro Finance banks? Are they covered by the government insurance? They offer attractive rates of 8% or more. Probably one could park a lakh or two each in to some of them?

The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks.

In case of doubt, depositor should make specific enquiry from the concerned branch official in this regard.

Also note that the insurance coverage is available provided applicable premiums are paid.

[vharihar]

Originally Posted by V.Narayan

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.

Thanks for your useful post! One question:
I have 9 more years for retirement. Taking another health insurance now (besides what we already have from employer) simply to avoid having to pay high premiums if we take it after retirement, would involve paying premiums for it for an arguably unused insurance as long as I'm employed, meaning I'd be paying needless premiums for 9 years (assuming I don't lose my job; lets go with that assumption for now). So its a needless cost. Does this cost offset the premium-if-taken-after-retirement by such a great extent that it still wins out?

Lastly, would you suggest the same about life insurance also (taking another one besides what is offered as part of employment)? I'm thinking not, esp since only 9 years left to retire!

[jkrishnakj]

Good question Harihar, exactly the one that I was pondering over. I have the exact number of years before a formal retirement from corporates.

I have somehow avoided the life insurance policies, thanks to some lessons in the past. These days I am inclined towards FD and PPF. I am also thinking of a good MF to put in now and not touch it for a decade.

Some great advice on nominees. I put a tracker and checked stuff.

[AltoLXI]

Originally Posted by vharihar

Taking another health insurance now (besides what we already have from employer) simply to avoid having to pay high premiums if we take it after retirement, would involve paying premiums for it for an arguably unused insurance as long as I'm employed, meaning I'd be paying needless premiums for 9 years (assuming I don't lose my job; lets go with that assumption for now). So its a needless cost. Does this cost offset the premium-if-taken-after-retirement by such a great extent that it still wins out?

I have taken health insurance and paying 15k every year from the past 5 years though I have not used it. Twice I used my employer provided health insurance for my mother's treatments. The reasons I bought additional health insurance :

1. Even though it might appear like waste of money, one never knows when the employment comes to an end abruptly and god forbid if something untoward happens.

2. The employer provided policy is family floater and has a upper limit. The additional insurance can be utilized along with the employer provided one in case the bills are way beyond employer provided insurance limits. My wife used to work in insurance section earlier and she told how some of the treatments can easily cross 10-15 lakhs and patients struggled to pay the bills.

3. The premium will be lesser if bought when the age is less.

[V.Narayan]

Originally Posted by vharihar

Thanks for your useful post! One question:
I have 9 more years for retirement. Taking another health insurance now (besides what we already have from employer) simply to avoid having to pay high premiums if we take it after retirement, would involve paying premiums for it for an arguably unused insurance as long as I'm employed, meaning I'd be paying needless premiums for 9 years (assuming I don't lose my job; lets go with that assumption for now). So its a needless cost. Does this cost offset the premium-if-taken-after-retirement by such a great extent that it still wins out?

It is not a question of cost of one option versus another. It is a question of whether health insurance will at all be available to a first time insurance seeker of age 60 and what his/her health is like at that age. Whether you get or don't get insurance for your health & your spouses health will be determined by parameters such as weight, blood pressure, heart condition, diabetes, etc. Cost can be a constraint, which is understandable as you are at an age where settling children, high education fees all come into play. In that case start your health insurance for self & wife now but for a smaller amount, then increase it after retirement to a larger amount. The insurer would have your track as a insured person who (hopefully) never claimed any big sum or had a major illness and would be happy insure you for a bigger sum because by then you would have a track record with them. Another thing to look for is re-imbursement of out patient bills and pharmacy bills - this is usually available at almost no extra cost but the insurance agents often 'forget' to include it in your terms.

I took out a policy for wife & self for Rs 50L total many years ago. no claims were filed, touchwood. So closer to retirement I made it a Rs 100L each policy and as we had a no claim track record over several years the insurance company upped the amount without even a medical test except an ECG for me.

I couldn't take out insurance for my mother and father in law as by the time private health insurance came to India in a meaningful way (about 20 years back) both were 60+. Recently my mother suffered a prolonged illness requiring 2 surgeries and over 6 weeks of hospital stay and 10 weeks of home nursing which made me lighter by close to Rs 25 lakhs.

Lastly, would you suggest the same about life insurance also (taking another one besides what is offered as part of employment)? I'm thinking not, esp since only 9 years left to retire!

Pure life insurance is not worth it at this stage. Though some of the life insurance companies offer pension schemes that require investment of a fixed sum for 10 years a waiting period of a few years thereafter after which you can get an annuity income quarterly for as long as either you or your spouse is alive. Hope this helps.

[sushantr5]

I would like to get recommendation for non-participatory wealth creation plans something like

Max Life Smart Wealth Plan

Where illustration shows 6% annual compounding returns if we put everything in excel.

This plan is being strongly recommended by bank relationship manager. I see 6% interest guarantee is not bad at all for next 36 years, if everything is alright then why not?

But I do not know how this investment plan really work? does this really work? I request experts in this forum to throw some light.

[srikanthns]

Fantastic thread! I have very few years to go for retirement(lower single digits) and I was interested in Retirement home/Gated community.
There were few posts on the retirement homes in the beginning of this thread. Later it has come to the investment angle to ensure the corpus for the duration of retirement years.

From what i have seen of retirement homes in Bangalore,Chennai or Trivandrum(where I reside) , the price charged seems to target only upper middle class only (Even a 2 BHK for around 55 lakhs in Trivandrum to 75 lakh items in Bangalore and Chennai).

We look for proper upkeep of the house and emergency medical help apart from the common food court.

Do we have builders who charge a reasonable amount? Because upward of 50 lakhs for the Retirement home will take away a chunk of my retirement benefits, then where is the amount to invest?

Alternatively, whether these are available on Rent or Lease (10 yers, like that)? Good ones, I mean.

Thanks in advance for your time

[graaja]

Originally Posted by sushantr5

I would like to get recommendation for non-participatory wealth creation plans something like

Please stay away from this scheme. I did some reverse calculations in an Excel file. If after paying out 4,73,800 for 25 years, the corpus becomes zero, then the returns is just 4.8%



If you were to assume the returns is 6%, then after paying out 4,73,800 for 25 years there should still be 51 lakhs left in the corpus, which you don't get to use. So, the bank makes money with your investment.



Also, look at the amount you would lose if you were to surrender the policy!

Now, if you were to take out a term insurance for 1 crore with a premium of 20K, and invest 4.9L in a variety of debt instruments including Gilt, Banking and PSU, Gold funds and Liquid funds, you should be able to manage a 6% (or even 7%) returns. See how much you can withdraw for 25 years for 6% and 7% returns. And if you want to stop investing and redeem all the amount, there is no penalty. All the money is yours except for the capital gain tax you would pay.





Bank employees always promote these type of ULIPs as that is where banks make the most of their money. Check out the below post by a fellow TBHP member.

https://www.team-bhp.com/forum/shift...ml#post4845372 (Insider's account: Upselling techniques of banks & financial institutions)

Please do not mix insurance and investment. Keep them separate and you can build wealth.

PS: We are not even talking about inflation here. If you factor in inflation, the amount you draw in the later years will have a lot less buying power.