Karnataka - Mangalore   

Retirement strategy made easy

Rohan Rebello

MANGALORE: Biggest mistake people make is planning for retirement at the fag end of their career, according to city-based Chief Consultant of Benchmark Strategies, Rohan Rebello.

He was speaking on “strategies for financial planning and retirement planning” at a programme organised by the Mangalore Management Association at SDM College of Business Management here on Friday.

He said those who start saving for retirement soon after getting job would amass huge funds even if they saved Rs. 500 to Rs. 1,000 a month. But they must exhibit discipline and save every month without fail .

Systematic investment of Rs. 1,000 for 15 years had resulted in a wealth of Rs. 40 lakh in one case, he said. But the underlying rule was not to fiddle with the investment.

An investment of Rs. 70,000 in PPF for 40 years would leave people with a wealth of nearly Rs. 5 crore, Mr. Rebello said.

Although rate of interest offered is only 8 per cent in PPF accounts, the annualised returns would work out to over 11 per cent when tax benefit was taken into account. But people postponed investing early saying “I will do it in one of these days. One of these days is none of these days. Start investing now,” he said.

Invest in equity

Quoting Warren Buffet and other leading investment masters, Mr. Rebello said in the long run share market offered best dividends. BSE companies had given a return of 16.75 per cent and beaten all other investment options from 1981 to 2011. But those who churn their investments often and did not show consistency, listening to advises from various quarters – brokers or experts on television channels – may not realise the returns.

He advised people to save in Equity Linked Saving Schemes (ELSS) or index funds through systematic investments plans (SIPs). He said they could invest in good mutual funds (after verifying their performance on sites such as valueresearchonline.com). Timing the market would not work, he cautioned.Mr. Rebello said the biggest problem with the youth was that they spent using credit cards and bought expensive gadgets instead of saving. Urging them to spare the credit cards to avoid debt trap, he said they should decide their monthly savings first and then limit the expenses to the remaining amount. Every one should save at least 10 per cent of the take home and keep aside at least 12 months income for emergencies.

He asked people to buy only term insurance plans, though insurance agents did not suggest them. He asked people to stay away from unit-linked insurance plans which took away 40 per cent of investments towards different charges. Also purchase of gold ornaments made no sense because people paid 30 per cent of investment towards making and wastage charges.

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