Why Women Should Plan Their Retirement?

Last Updated : Nov. 20, 2019, 3:41 p.m.

The Indian society has been a male dominant one despite women taking rapid strides in every walk of life. While women take centre stage in routine household management, they hardly have a say on their future. Even working women don’t emphasize much on their retirement planning. Most consume their entire earnings on shopping and other stuff, putting their future solely on the hands of their husbands. But as life remains full of uncertainties, there can be incidents like prolonged unemployment of husbands or a shocker in the form of divorce. If such things do happen, women can be all at sea. So, all you women don’t just rest on your husband’s income, make your income accumulate into a large sum to live a peaceful retirement life and feel proud of your effort.

Pointers That Indicate Women Must Plan Their Retirement at the Earliest

Unpredictable Future in the 40s & Afterward – The work pressure refuses to relent at any stage of your professional life, be it at an entry-level or the levels above. This sort of environment calls for an increasing number of young and skilled personnel who could do bulk with precision. Most look to work in the same organization when they hit 40s and don’t want to experiment by switching to another workplace. Plus, many organizations don’t hire people of such age. So, the sooner the women start saving from their income, the more the corpus they will generate and make up for the hiccups that may come along their way.

Depreciating Value of Money – The value of money only depreciates with time. If a ₹100 was enough to buy a 1 kg stuff a decade back, the same quantity will now be available at ₹150 or so. All thanks to the inflation that depreciates the value of money considerably over time. Women of today’s era won’t like to compromise on their needs even after they retire. It only calls for investment at the earliest so that the retirement corpus is tall enough to accommodate inflation.

Now that the article has elaborated on the importance of retirement planning for women, it’s time the ladies take note of the investments they must make to ensure their retirement days remain good.

Equity Mutual Funds – Arguably the Best Tool to Generate Inflated-adjusted Retirement Corpus

One of the best investment vehicles to generate retirement corpus, equity mutual funds look to make the most of the bull run. Plus, they can provide inflation-adjusted returns. The importance of such returns is demonstrated above. Yes, you must have a high risk appetite when you decide to invest in these funds. So if you have a long investment horizon, you can make small and regular investments in these funds by taking the route of a Systematic Investment Plan (SIP). A monthly investment of ₹5,000 can help you generate a corpus of around ₹50 lakh after 20 years. The calculation is made at an assumed annual return rate of 12%.

You can pick from large-cap, mid-cap, small-cap and multi-cap mutual funds as per your ability to take risks. If you have a medium to high risk appetite, you can invest in large cap funds that offer stable & consistent returns owing to strong fundamentals. You can even find it good investing in a multi-cap fund that keeps the money in companies across market capitalizations. People having the ability to take high risks can go with mid or small-cap funds as they can deliver fat returns.

Invest in Multiple Equity Funds to Diversify Your Investments Further

As they say, don’t keep all your eggs in one basket, you should probably look to invest in three funds – 1 large-cap fund, 1 multi-cap fund and either a mid or small-cap fund. Select the funds based on the performance they have delivered over the years. You may find it hard investing in all three from the beginning. So, you can use the incremental growth in your income to spread your investment and mop up more over time.

Disclaimer – “Mutual fund investments are subject to market risks. Please read the scheme related documents carefully before investing”.