Some Simple Retirement Products Suitable For Most Savers

Early Retirement

How Much Should You Save For A Comfortable Retirement

Many of us tend to think of retirement planning as a very distant event. Especially for those of us who are in our 20s and 30s, we do not feel a pressing need to start saving for our retirement. But financial planning is vital for a secure and stable financial future. The earlier we begin, the more we can save and maintain our current lifestyle even after retirement.

The article suggests top retirement products that can suit most investors.

Investment products to consider to build retirement savings

  • Employee’s Provident Fund (EPF)

EPF is a preferred retirement savings product for the salaried class in India. It can help save for retirement without having to pay tax on it. An employer and the employee make contributions to the fund. The interest, as well as the EPF corpus at the end of the retirement, is tax-free. However, this retirement product can be ideal if you stay invested in it for the long term, even while switching jobs.

  • Voluntary Provident Fund (VPF)

VPF allows you to contribute towards the provident fund account over and above the 12% contribution towards EPF. The maximum contribution can be up to 100% of the Basic Salary plus Dearness Allowance. Since the enhanced contribution is voluntary, employers do not need to match the input in VPF.

  • Public Provident Fund (PPF)

PPF is a common investment product for non-salaried people due to its combination of tax savings, returns and safety. Compared to EPF, the returns on PPF can be slightly lower. Plus, there is an upper limit of Rs.1.5 lakh up to which you can invest and get a deduction under Section 80C of the Income Tax Act.

Nevertheless, it can be a powerful investment tool for wealth creation.

  • National Pension Scheme (NPS)

NPS is another notable option as it offers exposure to both equity and debt and controls asset allocation. On retirement, you can extract a part of the corpus and use at least 40% to buy an annuity for securing a steady income after retirement. The accumulated pension from this annuity is taxable. The remaining 60% is available as a lump sum payment and is tax-free.

  • Equity Mutual Funds

When you invest in mutual funds for long term horizons such as ten years or more, you get the benefit of compounding. Besides, mutual fund investments offer inflation-beating returns and can help you grow money faster. To reap maximum mutual fund benefits, experts advise investing in them via Systematic Investment Plans. This helps average the purchase cost in the long run and fetch higher returns.

Conclusion

Apart from retirement products such as EPF, NPS, PPF and VPF, you can invest in mutual funds online as part for your financial planning for retirement. If you are a novice investor, read about the different types of mutual funds to decide the best mutual fund schemes to invest.

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