Invest Smart: Retirement planning - Here's all that you need to know

In today's fast-paced world, financial planning often takes a backseat to immediate desires and needs. However, planning for retirement is a crucial aspect of securing your future financial well-being. In this episode of 'Invest Smart,' Avni Raja discusses the key aspects of retirement planning with Kartik Jhaveri, Director, Transcend Capital, shedding light on its importance and offering valuable insights.

The recent India Retirement Index study conducted by Max Life Insurance indicates that awareness regarding retirement has increased in urban India. This points to a positive trend in retirement preparedness, and this rise is attributed to a significant increase in health awareness.

However, Kartik Jhaveri believes most people begin contemplating retirement planning as they enter their mid-40s, primarily because they can visualise retirement on the horizon. This trend has been consistent over the years, with the focus on retirement gradually increasing as people age.

Retirement planning might not rank high on the priority list for those just starting their careers. The early years are often dedicated to fulfilling immediate desires like gadgets, travel, or investments driven by market trends. However, as responsibilities grow, such as having a family or acquiring properties, retirement planning gains prominence. The earlier one starts, the more advantageous it is due to the power of compounding, Jhaveri adds.

He recommends initiating retirement planning from your very first salary, and emphasises that even small monthly contributions, such as through Systematic Investment Plans (SIPs), can grow into a sizable corpus over time.

Talking about investment strategies Jhaveri says that, equity investments are essential for building a robust retirement corpus due to their historical returns. While fixed deposits offer stability, equity investments can yield between 12% to 15% return over extended periods. Various options are available for equity investment, including SIPs, stock portfolios recommended by brokerage firms, small cases, and direct stock purchases. Equity investments have the added advantage of favourable taxation.