FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
5 things to do before you retire!
Planning for retirement and doing something about it is something that most youth and elders detest. For the youth there is no incentive to plan for something that will come up 35 years later. For the elders, the fear that they may not have enough money in their last phase of life prevents them for doing a deeper analysis and action after that.
Retirement Planning is not only about money
There is more to retirement planning than money. Some of the key things to be planned which actually make the planning more interesting is to consider:
- How will you spend your time?
- Places to visit
- Tackling health related issues
- Sharing the wealth created
- And finally planning for income (of course)
In fact, most people just think of the last one without considering the first four. This leads to confusion and fear.
Tips for Retirement Planning
Plan Time: Many retired people are lost because they have not planned for the question “What next?” It is important to find some activity that will fill the 8 to 12 hours that one has spent at work. This is not only for the breadwinner but also for the homemaker. What will you do to manage a new person with whom you need to share 8 to 12 hours, suddenly?
a. Think Social Activities: There are so many activities that one may have thought of doing to the society and not done due to want of time or due to other priorities. Post retirement one can take them all with a vengeance. This not only a time filler but also a very good way to keep the brain stimulated.
b. Think Hobbies: Apart from filling time and keeping one mentally agile, hobbies also add to your skill sets. Taking up a new hobby and joining a hobby club is a great way to manage retired life.
2. Plan Travel: Except for the envied few who had great travel oriented jobs, most would have sacrificed their travel plans for their career. And don’t grow too envious because those jet flyers on the job are also cribbing because they had to travel on such tight schedules that they hardly got to see anything worthwhile travelling on the job. Retirement is a wonder time to plan for all those missed countries and places to visit.
3. Plan Health: Health insurance is very handy when you are retired. But if this is planned on the brink of retirement not only is the cost too high, but diseases may already have set in. This means that the pre-existing diseases will not be paid for by the insurance for upto 4 years after taking the plan.
4. Write a Will: Writing a will to efficiently pass the wealth created to our loved ones is very important. However in India, this is a commonly absent practice. Even some of the richest persons in India have not taken up this practice (think Dhirubhai Ambani). This leads to costly and lengthy process of passing our hard earned wealth to our loved ones.
5. Plan Finances for Regular Income: Though this aspect alone can be written in whole books, the basic idea can be summed up with a few point:
a. Do not to lock up funds in illiquid assets without cash flow – avoid buying a large house for you to stay and prefer a house from which you can get a rental income.
b. Do not to give away wealth too soon – having cash does not mean that you can give it away to your sons and daughters and brothers and sisters or to a temple. Give it to them through your will so that they get your wealth, and at the same time, the money works for you when you are around.
c. Do not experiment – To experiment with retirement funds in the stock market and commodities or a new business post retirement is highly risky. You may not have the time or energy to earn the money lost (if lost).
Retired life is supposed to be fun filled and peaceful. But today we find more old age destitute homes popping up than schools, indicating a trend towards lack of retirement planning. The above tips will help those in their prime of life and those near retirement to plan for a comfortable retired life.