Try these Retirement Funds to Avoid Tax Erosion

When it comes to financial planning after retirement starting early is the wisest thing to do. Where and how should you invest is going to impact your life in the most crucial phase. This is when you need your money to speak the most, the time when your salary ceases to be credited to your account. With varied investment plans fighting for your attention, planning ahead for your retirement portfolio not only helps you generate a monthly income but in some cases helps you meet up your long-nurtured financial goals.

Best Retirement Plans – How to Keep your Future Secure and Free from Financial Problems

Follow the below-mentioned tips and tricks to make your retirement plan work. 

·         Early Start is An Apt Start

What does starting early mean? It means starting the financial journey in the first or second month of the financial year. Informed and calculated investments equal good investments. Once you have ample time on your hands to make the necessary changes. Investments that fail to meet up with your expectations can be substituted with investments that match your financial goals and frankly this can be only possible once you start early. 

·         Making the Right Investments

The next thing to take note of is to explore and understand the tax-saving options. Any individual taxpayer can think of saving as much as Rs.1.5 lakh per annum according to the Income-tax Act, 1961 falling under the purview of section 80C. This involves a number of things such as paying off the home loan payment, insurance premium, and school tuition fees for two children and so on.

Check out the below-mentioned retirement plans. There is a host of retirementplans, but the most popular ones are the following:

•ELSS funds: The equity-linked mutual funds are what everyone is investing in for higher returns and ELSS scheme is particularly lucrative because it has the lowest lock-in period, only 3 years. These are the best options for you to try as it helps beat inflation and ensures long-term high returns, as they invest in stock markets. Another lucrative feature of ELSS funds is that they become tax-free after you hold them for more than a year.

•Public Provident Fund (PPF): One of the most popular tax-saving investment. There are more pros to this scheme than cons as it offers guaranteed returns, it becomes tax-free once it matures and it protects your capital too. The only con of the PPF is its long lock-in period, as long as 15 years.

•National Pension System (NPS): It is an equity-based scheme and the maximum exposure to equity can be 50%. The cons of the NPS are that you can withdraw the money only after retirement and another being it is fully taxable. You also have to use a major portion of your corpus, read 40% to buy annuity post your retirement. 

•Tax-saving fixed deposits:  These works for most retired persons as they have a reasonable lock-in period of five years and offer pretty impressive returns besides ensuring capital protection as well.

Besides the above-mentioned retirement planning schemes, there are also Senior Citizens’ Savings Scheme, unit-linked insurance plans, and National Level Certificate. So amongst a host of retirement plans, which one should you choose? You will think that you are having way your fingers in too many varied pies, read investments but that is the best way to protect your retirement capital and guarantee a substantial income every month. In other words, diversification is the key.

 Diversify More

Keep your portfolio diversified by building one that includes a mixture of both equity as well as debt. In most cases, young people should invest 50-70% of their tax-saving investment portfolio in ELSS funds. Invest the rest of your money in PPF and FDs. 

Track your Funds

Evaluate your ELSS funds periodically since your performance is linked to the volatile stock markets trends. Ensure you check your ELSS funds quarterly. Funds which keep faring poorly can be replaced by another fund to ensure your portfolio funds stay secure.

Staying invested in ELSS funds is the order of the day now as they help in tax saving and also enables wealth generation. So, invest right and build the right retirement portfolio to help you tide over your retirement years with ease. As they say, life begins at 60, and if you have finances aided by the right retirement plans you will be able to explore the finer nuances of life even after retirement.