For the first time in Navi Mumbai, Moneylife Foundation conducted a seminar on retirement planning and investing, where Sucheta Dalal, managing editor of Moneylife and founder trustee of Moneylife Foundation, spoke about ‘Safe Investing and how not to lose money’ and Debashis Basu, editor and founder trustee of Moneylife Foundation, discussed about ‘Smart Investing’. Moneylife Foundation has conducted many such seminars for senior citizens at its Knowledge Centre in Dadar. But after receiving several requests,
Moneylife Foundation and SIES College, Nerul held a seminar on Saturday on smart investment in a very easy to understand format.
The Seminar covered issues like how much to save in order to maintain a comfortable lifestyle for 25 to 30 years after retirement, as lifespans have increased. What is the ideal mix of assets in order to stop the erosion of savings due to inflation, without taking needless risk with your money?
During the first session, Ms Dalal explained that people needs to plan for their silver innings. Savings should be enough to cover their expenses for another 20-30 years; however, income from savings fluctuates with interest rates. She told the audience that people do not know about the difference between insurance and investment, therefore, they trust agents, who insist that they buy policies in the name of their children or grandchildren. She told the audience about various cases that have come to the Foundation involving forged signatures, fake ID proofs and fake witnesses.
She gave a few banking tips to the participants about how to keep their money safe. She shared a story about a 79-year old man Mangelal Sharma, who was cheated by IndusInd Bank, which Moneylife has written about. She ended by giving a brief introduction on estate planning such as Wills, Trust, gift, insurance and nomination and the issues surrounding them.
Getting a Will right is crucial if disputes between heirs over legacy are to be avoided. “Nominations make things easier, but it’s important that people observe basic financial hygiene and keep updating their nominations,” says Ms Dalal.
She also explained why it is important to pay attention to medical care especially heart, knees or teeth during the old age.
In the second session, Mr Basu explained that retirement planning can be complicated. There are hundreds of financial products available. However, to plan with them is tough because of one critical unknown – how long is the money needed. In order to answer this, it is important to define your retirement, set target for savings and save towards it, said Mr Basu.
Mr Basu suggests the use of the financial planning calculators available on the Moneylife Savers website—savers.moneylife.in/calculators.html, to help make the number-crunching easier. An ideal asset-mix would depend on the age and the number of dependents of the person.
Mr Basu made people aware of the pros and cons of different financial products such as immediate annuities, Senior Citizens Savings Scheme (SCSS) and MIP schemes, but emphasised that none of these are great choices. In the post-retirement period, it is important to choose safe assets, for which bank fixed deposits are among the best but one can also pick from other options such as corporate bonds, short-term debt schemes of mutual funds and fixed deposits. For those in 20% and especially 30% tax bracket, an excellent option is listed tax-free bonds from government companies. However, investing all the money in fixed income products for the very long term may turn out to be imprudent because they do not beat inflation. Retirees may like to invest some amount of money in equity mutual funds, especially at the earlier stage of their retirement. Towards the end of the session, he focussed on reverse mortgage and how it can be used as a source of income in retirement.
The session was ended with an interactive session of Q&A with the audience for having their doubts cleared.
