As the economy gets more open and more connected to the world, investing is becoming and will become more difficult. Once upon a time you bought a HUL, L&T, …(sorry I am saying all this with hindsight bias) and then hoped that life is easy.
You joined the government services and were sure that at age 90 years your widow will get a pension good enough for her to live with a lot of respect.
However going forward this is not going to happen. You will work for lesser number of years, and you are likely to live longer than your grandparents as perhaps your parents too.
How does one go about planning for ones retirement? Buy a pension plan from a mutual fund (there are only 2 of them and not at all suitable unless you are about 40 years of age ATLEAST), or from a life insurance company (too damn expensive in terms of amc charges, and with terrible uncertainty of how it will be distributed.
YOU HAVE NO CHOICE OF DOING THE FOLLOWING:
buy a pension plan (small amount for 80C benefit esp if you do not have an employer PF)
use your PPF (open one if you do not have it..but deposit only a small amount till you reach age 45)
do a SIP in a good well balanced fund (do not lose sleep whether it is large cap, small cap, etc. – if you are looking for names Franklin India Blue Chip, Flexicap, Hdfc Prudence, Icici Pru discovery,…) pick your poison.
Keep all these in a big Manila cover marked “Retirement” and religiously keep your monthly contribution going into it. At a younger age (22-50) keep putting highest amount into the EQUITY sip…then reduce the equity component.
By 55 your corpus should be ready…and you should plan withdrawal for age 58 …and beyond.
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