Retirement age is heading towards 50!

Systematic Withdrawal Plans allow investors to take fixed or varying amounts out of their mutual fund schemes on predetermined dates each month, quarter, half-year, or year depending on their needs. 

An investor can tailor the cash flows to suit his needs; he can choose to remove a set amount or just the capital gains from his holdings. The investor receives a regular income from SWP as well as returns on the funds they have left in the scheme.

It implies you put money into mutual funds and continually withdraw money as needed. The withdrawal amount may also be changed at your discretion.

Monthly, quarterly, half-yearly, or annual withdrawals are all possible.

An investor may decide to withdraw funds by redeeming a small number of units on a recurring basis in order to earn a regular return. In this regard, the withdrawal's date and the amount must be determined.

Additionally, taking a portion of the money gradually rather than all at once assures that the investing aim is not impacted. Investors can also use the SWP calculator to calculate the predetermined withdrawal amount from their investment while considering the interest received.

In your 25, you should do the following five things:

1. Purchase enough health insurance.

Nothing you read after this point will matter if you or a member of your family needs hospitalization and you don't have enough insurance; your financial planning will be for naught.

India's annual medical inflation rate is 14%, highest in Asia!

2. Set Your Financial Goals and SIP in Line With Them.

What about the 50-30-20(need-want-savings) rule, which suggests investing only 20% of income? The very least is that. Put whatever you can into it. During your twenties, practice moderation.

Typically, your financial goals will be greater than what 20% can afford.

3. Know the key differences between loans' simple interest and compound interest.

4. Avoid paying interest on luxury items.

With about INR 2,250 per month, purchasing an iPhone is really simple. EMI with no fees, what?

The desire for instant gratification depletes your emotional intelligence. You'll appreciate it more if you wait and save for it.

5. Rent a home instead of buying one.

Home is dream project indeed but you shift cities in your 20s to earn more money. EMIs can take away your freedom to establish a business.

Only 30% of urban Indians purchase term insurance.

Nearly 60% of Indian term insurance holders have no idea about the product! 

 This is why:

1. Thinking of it as a massive cost

One in four urban Indians believes that term plans have expensive premiums. The truth is that one of the least expensive methods to cover your life is term insurance. Additionally, if you buy early, you get to permanently lock in reduced premiums. There is also the potential tax benefit of paying premiums. 

2. Dicey concept of Investment in Insurance:

The return on premium option in term plans is seen by 70% of Indians as the most crucial component of their coverage. However, these policies frequently have exorbitant premiums. 

Others avoid it due to complicated terms and desperate selling practices by agents.

Then what?

You will be able to make much more money than you will after the policy ends if you invest the premium difference between the ordinary term plan and a Term insurance Return of Premium in better financial assets.

After tech-giant Twitter and Meta, banking behemoths Citigroup, Barclays, and Morgan Stanley activate their firing squad— the HR managers.

Following the US trend, Indian startups fired 15,000 in the first 6 months of 2022; however, bootstrapped companies have not joined the chorus.

You can't blame Elon Musk or Vladimir Putin for all!

Here are 5 critical items that must be addressed.

Emergency funds - Try accumulating at least 12 months' worth of emergency cash at an 8% inflation rate that you can use in case of job loss or layoff.

Your emergency reserve should be two times your current annual expenses.

Health insurance - Be sure to get the proper coverage to cover unforeseen medical costs. It's tough to avoid depression and pressure at this time!

Cutting back on supplemental or unneeded spending.

Try to avoid buying COMFORT ZONE, whether it's expensive food or equipment; since there is no source of income, we should ignore the wants.

Avoid new loans despite them being under control.

When you don't have a job, avoid taking on any extra debt that could give you problems or worry.  Try to join passive income club.

 Create a new budget and determine which costs are necessary right now and which ones are not in order to prevent a dire situation.

Bachelors who are working from home, if spend only 10 to 15 percent of their money and might be earning that back through their investments or even more than that in the long term is as good as investing 100% of their salary.

Interested in Gold investment?

Try SGB, as these are:

1 - Secure and purest: Issued by RBI

2 - Gives you the same return as physical gold Underlying asset is Gold for these bonds

3 - Additional 2.5% interest income per year as compared to physical gold

4. No fear of theft.

The exact requirement of a retirement kitty is based on 

# Your current expenditure, 

# Your current earnings, 

# Years to retirement, 

# The life expectancy of you and your spouse, and 

# The return expectation from the investment etc.

There is no special or right time to start managing your finances for your retirement as well as other financial goals.

But if you are still finding a good time then there is no better time than Diwali which is at our doorstep.

Diwali is the biggest Festival in India. All 5 Diwali days are considered auspicious for shopping, booking houses, starting new businesses, and buying vehicles.

We all can also start taking our finances seriously this Diwali and mark it as a new start.

The sooner you start investing the better will be your wealth creation.

Diwali is a good time to start learning about basic concepts of financial planning such as

# Risk profiling,

# Asset allocation,

# Goal-based investment,

# Review and Rebalancing, etc.

All these terms are important to plan your investments in a proper way.

If you are naive and want to start your investments this Diwali then first

# Identify your financial goals

# Fix the investment horizons

# Decide the asset allocation for every goal

# Select suitable financial products

For short-term goals, one can use RDs, FDs, liquid funds, and money market funds along with Arbitrage funds.

For mid-term along with these products, one can add hybrid equity funds.

For long-term goals, you can have a blend of EPF/ PPF/ NPS along with Index Funds, Flexicap Funds, and small exposure in mid-cap.

One can have exposure to SGB, Gold ETF, or Gold Mutual funds for diversification in the Gold asset class.

# If your goal is 10+ years away, then any day/week should be fine to invest in MFs.

# Always keep investing & topping up your investment as your income grows. Min 5% or the same as your yearly increment.

# If you have additional lumpsum and you see a dip in markets > 5% then you can deploy 20–25% of those funds.

# Invest only in Direct Plans of MFs which will save the third-party commission and will help in additional growth in your long-term wealth..

Living on your own and not being a financial burden on others, especially on your kids is the most important motivator to plan your retirement well.