Here are some more things which people tell you regarding retirement. Here I am bashing them as wrong. It may have been right a few years ago…no longer true.
1. Your debt and equity asset allocation should be based on the 100-age rule: So if you are 70 years old, it should be 100-70 should be in equities, i.e. 30% should be in equities. Well the answer is, if say your expenses are Rs. 5 lakhs per annum, and you estimate that you will live for say another 15 years, then Rs. 75 Lakhs should be in debt funds/ bank fixed deposits / ppf, etc. Balance should be in equities. Forget the age rule of asset allocation.
2. In a worst case, you can always go back to work: Forget this. It will NEVER, EVER happen. We are a young country and there will be tremendous pressure on older people to retire. Yes if you can migrate to jobs or geographies where there is a skill shortage – Germany, France, UK….you stand a decent chance. In India old people cannot FIND jobs.
3. You can downsize your house and use the equity created for creating a bank oriented asset class. This will not happen in a hurry, forget it.
4. In a tight situation you should withdraw from your Pf or ppf : well it is given as ‘Subra I said it is ok’ – does not matter who says what. Do not withdraw. Simple.
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