I have many people
telling me, I’ll discuss when I have the money, but as you keep accumulating
the money, you have lost time and the key to making money multiply is time. Life expectancy is going up regularly, because
of better healthcare and increased knowledge of personal care. In addition to
this our standard of living is also improving on a daily. All this is leading
to longer life, but our working life remains the same. We have time till the
age of 60 or 65 to earn, but life expectancy is increasing. As per the
statistics they say average life expectancy is 66 in India. Look around you, is
it actually so, it is much higher. Though healthcare and personal care has gone
up, there is a silent killer which few of us keep track of and that is
inflation. This disease Inflation just reduces our purchasing power, petrol
which was Rs.9 per litre in 1990 costs Rs.70 today, we don’t know what it would
cost some years hence, but are sure it would increase.
Prices of everything has
gone up and keeps increasing. As we are on the topic of prices, even healthcare
prices are going up. If we continue to invest in our normal style of investing,
soon there would be a day, where all your money would be gone. So we need to find
a cure for inflation. Since we want to earn better we put in more efforts
towards education, which again is an investment as well as a cost. As we study
longer our working life reduces, remember, retirement age is not going to
change very soon. So the time to make money is shortened. We might live a good
life when we are working, but would end up with old age poverty. Everyone expects
returns, but for insurance returns is only if you get sick, which comes to you
only in your old age and this will lead you to poverty faster, if you do not
invest in a medical insurance policy early.
Most of the insurance
companies refuse to give insurance to old people or they give it with a lot of
restrictions. Just planning for having enough money to take care of your necessities
after retirement is not enough, you also need to take care of your medical
needs. Medical needs keep increasing with age. So start investing in medical
insurance now. Fixed returns are safe, but the returns never beat inflation,
hence you need to start investing in high risk securities at a younger age to
build the corpus for retirement. You go to any financial planner at the age of
60 and tell him to help you in planning his funds and most would put the money
in debt schemes with a visibility of returns as your risk taking capacity is
reduced or should I say Nil. Don’t think of retirement planning then, start
planning now, however small it might be, let the power of compounding will help
you.
Asset allocation is the
key to retirement planning, when you are younger, equities is the way to go as
you start aging, slowly reduce the quantum in equities and increase your
investments in debt, so that by the time you retire a major portion would be in
debt, but you would have enough to take you through. You would have noticed
that all the time we just did not talk about money, but we also spoke about
time. So do not waste time, let us work towards taking precautions against the
silent killer and ensure a safe retired life.
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