The thought of saving money for your retirement may have struck you several times. However, you have been deterred from your plans on several occasions. Experts continue to emphasize the importance of investing money in your retirement early on. It is essential to support the lifestyle that you wish to live in the years to come.

When planning your retirement corpus, one of the most difficult questions to approach is how much money should you save? What is the total fund amount that it would take for you to support a comfortable retirement?

Well, there is no one-fitting answer for the total corpus approach that you should use when saving for your retirement. It essentially means that it differs based on the lifestyle that would like to live in your later years. Consider the several goals that you aim to achieve during the period. These could include buying a vacation home, going on a foreign trip, funding the educational fees of your grand-kids or just about anything. Closely consider all the possible goals that come to your mind and move towards building a strong savings goal.

Rule of thumb to follow

A general rule of thumb that you can follow is having a ‘replacement income’. This essentially means having 80 percent of the yearly salary that you have earned while working. If you make 10 lakhs a year when employed, you should have at least 8 lakhs a year when retired. Once you have this amount at hand, you can then multiply it by the average life expectancy after you retire. This can be a minimum amount and you can add in the extra requirement based on your goals.

Aspects to consider when saving for retirement

There are two aspects to consider when placing a mark on the amount to save during retirement. These include:

Retirement and inflation – It is important to keep inflation in mind when deciding your retirement corpus. Over time, the rate of goods and services are bound to increase. This will decrease the stretch- ability of your rupee. Unless you invest in a special kind of retirement fund, your retirement savings remain flat. Thus, closely consider this aspect when deciding on your plan.

Use a mix of investment options – Your retirement plan must include different investment options such as senior citizen savings accounts, fixed deposits, mutual funds and more. Keeping a balance will ensure that you get the best returns. Senior citizen savings accounts are specially formulated with higher interest rates. On the other hand, options such as mutual funds can earn you high returns with a higher degree of risk. You must make an informed choice for better retirement planning.

Cashless payment has become a major part of our lifestyle and payment behavior. Credit cards are one of the most popularly used modes of cashless payments and the plastic card has become an essential part of wallets. This can be credited to the fact that a large number of retailers accept credit card payments. Additionally, users can also avail of a large number of benefits associated with credit cards.

If you are deciding on whether you must use one for your daily bill payments, here are some reasons why you must:

Payment flexibility – Even with a well-planned budget, it can be difficult to meet significant expenses in one go. This is when a credit card turns to be a very suitable option. They bring you the useful option of making large payments without any stress of carrying a large amount of cash. Credit cards offer interest free period upto 48 days so that you get enough time to manage your budget effectively.

Convenient automatic payment – A significant aspect of using a credit card is that it helps you avoid the possibility of missing a due date. You can trust the payment of several bills such as telephone bills, WiFi bills, cable bills and more to the automatic ‘set and forget’ mode using a credit card. Thus, when the due date nears, the bill will already be paid through automation.

Easy EMI payment – There may be months when your expenses may not be manageable. Based on your eligibility, credit cards can assist you with easy EMIs. Big purchases can be handled through easy installments without denting your monthly budget.

Earn reward points – Credit cards let you enjoy numerous reward points and cashbacks. Using your card for daily bill payments is a good way to pile on your points. Several brands and retailers collaborate with credit card issuers to offer users lucrative deals from time to time. The rewards you earn can be used to boost your financial returns. However, you must not bind yourself by this factor and make unwanted spending.

Safe payment mode – Credit cards offer consumer protection. This means that it comes with a minimum risk of fraud. If there is a theft of identity or unauthorized transaction, the same may be reported to the issuer and resolved.

While credit cards are known to bring great value when used responsibly. From carrying several payment benefits and facilities to being a safe option with cashless transactions, credit cards can truly prove to bring you immense financial bliss.

First salary is all about achievement, being excited, dreams coming true, pride, and being successful. Everybody has plans for what to do with their first salary, but not many would think of investing that hard-earned money. It may sound unappealing to invest your first paycheck, as you may want to spend it freely without being accountable to anyone.

However, do not forget that you are accountable to your retirement, your ambitions and your financial goals. The retirement corpus or any other financial goal cannot be achieved over night. The path towards achieving financial goal is time, consistency and long-term investing.

Let’s look at the example below to understand the importance and benefit of starting your investments early.

Mr. X started investing Rs 1,000/month for 10 years and Mr. Y started investing double the amount of Mr. X i.e. Rs 2000/month after 5 years [assuming growth at the rate of 12%].

From the above table we can see that even though Mr. Y’s monthly investments were double than that of Mr. X’s, but Mr. Y’s corpus was still not as large as that of Mr. X. This is because of the power of compounding where time horizon plays an important role. Power of compounding is nothing but the growth of your principal amount by adding the previous year’s returns to it.

This highlights the importance of starting early and staying invested for a longer time to reap the benefits of reinvesting the amount earned over and above the principal amount. This is how Mr. X has built a larger corpus because of the reinvestment of his earnings over a long period of time.

Now let’s look at some tips to smartly invest your first salary

Create a budget

Since budgeting helps you to plan your saving and spending pattern, it will ensure you always have enough money to meet your expenses after saving. The thumb rule for saving is to save a minimum of 20% of your salary. Do not spend before saving, always save and then spend. Certain expenses like electricity bill, loan repayment, grocery bills, etc. cannot be avoided. Make provisions for such expenses and then plan your savings structure.

Decide your financial goal

Having a financial goal is important as it gives you direction to save wisely, in terms of the investment amount and tenure required to reach that financial goal. Marking your financial goals as short, medium or long term, and taking inflation into account will help you arrive at a target for each of your financial goals. Based on these targets, you can then start planning your investments more efficiently.

Start a Monthly SIP

A Systematic Investment Plan (SIP) helps you start your investment with an amount as small as Rs 500. That way an investor need not have a large disposable income to develop a discipline-based investing habit. Through an SIP, you invest a predetermined amount periodically at a date specified by you. An investor need not worry about timing the market either as the SIP helps in lowering the overall cost of investment by investing at different stages of market movement.

Buy an Insurance

Insurance planning is also an important part of life planning, be it medical or life insurance. Buying an insurance plan at a young age leads to lower premiums with substantial life cover. Being insured ensures financial well-being of your family even in your absence.

Invest in ELSS to plan your taxes

An investor should look at financial planning and tax planning as a combined activity. An Equity Linked Saving Scheme (ELSS) helps an investor save taxes under section 80C of Income Tax Act by investing an amount of up to Rs 1.5 lakh in the scheme. Investors can then claim this investment as deduction from the total taxable income. When compared with other tax saving instruments, an investment in an ELSS fund has the lowest lock-in period of three years and also has the potential to generate wealth in the long run as it invests in the equity market.

As they say, the early bird gets the worm. Similarly, the earlier you start investing, the better it is as your risk-taking capacity is higher when you are younger. Also, the sooner you begin, the smaller is your investing capital, which gets compounded over a long period of time. So start your financial planning at the earliest as this would also help make investing a part of your lifestyle and help plan a better financial future.

With medical costs rising steadily in India in the last few years, availing a health insurance policy has no longer remained an option. To afford competent medical care without the need for spending exorbitantly, individuals can opt for any of the health insurance policies available in the market.

Now, health insurance policies can be broadly divided into several types, depending on the coverage they provide. Among them, two of the most important ones include –

• Individual health insurance policy
• Corporate health insurance policy

To know which one you should opt for that will effectively meet your requirements, you must first learn about what each of them entails.

Individual Health Insurance Policy – An individual health insurance policy that provides coverage for medical expenses of a single individual. This insurance policy can be availed by an individual for him/her, as well as for his/her family members. Here, the sum insured can be used to cover only a single individual.

Corporate/Group Health Insurance Policy – Corporate health insurance policies are the ones that organisations purchase for their employees. The employees working in an organisation are covered under a single insurance policy, which can extend to cover their family members as well.

But, is a corporate health insurance policy enough to provide comprehensive coverage as far as medical expenses in India are concerned?

Let’s find out!

Comparison Between Individual and Corporate Health Insurance Policies

The difference between these two types of health insurance policies can be illustrated in the table below:

Now, when it comes to deciding which one is the better option for availing competent healthcare, it is best to choose an individual health insurance policy because it will allow you the scope for customizing it as per your requirements. Even though corporate health insurance policies are cheaper, the benefits offered under them are also limited, as compared to individual insurance policies.

Which Policy Will be Better for Availing Coverage for Your Family?

While corporate health insurance policies extend their benefits to cover the employee’s family, they might not be enough to cover the medical expenses incurred for seeking specialised treatment.

For instance, you might need maternity care benefits for your spouse, which might not be covered under the corporate health insurance policies.

You might also need a senior citizen health insurance policy for your elderly parents, which might not be provided by the corporate health insurance policy. Which is why, it is always better to avail an individual or family floater health insurance policy to make sure that your family is appropriately covered.

Most individuals choose to avail an individual insurance policy in addition to their corporate health insurance policy to make sure that they are financially protected against any health-related liability that might arise.

So, make sure you check the benefits offered under each policy and look through the fine prints of the policy before you make a choice!