Creating a retirement fund is not enough; It also has to be well managed

“It’s because I didn’t manage my money efficiently, even though I earned well,” she said.

Currently based in Chennai, Preeta worked in Dubai for 20 years. She said, “I was so busy working and earning that I was only inclined to put money in the bank.” In addition, he invested heavily in real estate and bought a life insurance endowment policy for a hefty annual premium.

How much money management initially became an issue after that retirement, Preeta said it became a lot easier after Finzscholars Wealth Managers was appointed as her financial planner.

Liquidity was initially an issue: When Preeta went to Finzscholars three years ago, Renu Maheshwari, a SEBI-registered investment advisor, chief executive officer and principal advisor to the firm, explained that liquidity was a problem for her.

“Though he had substantial assets, he had very limited liquidity. There was enough liquidity for the next 3 years, which became more stressful when the rental income also went down,” Maheshwari said. “And this fact made her insecure whether she had enough money to live on her own. Will happen.”

After a thorough analysis, he was advised to liquidate some of his real estate. A redundant high premium insurance policy was also surrendered.

At present Preeta does not have life insurance. He has a. have health insurance with ₹10 lakh cover to take care of his medical expenses. Their plan also covers critical illnesses.

generate regular income: Post retirement, Preeta’s primary objective was to ensure that she had a regular income to meet her day-to-day expenses. “Never in life do I want to be an inconvenience to my children, and I never expect them to support me financially,” she said.

He has no pension or secondary income, so money has to be generated from his retirement fund.

Thus, it is important to note two things. “The first is adequate liquidity, the second is the growth of the corpus,” Maheshwari said.

To ensure this, we keep the money for five years for spending in 100% safe instruments with easy liquidity. It could be a combination of different types of fixed income security, she said.

“The rest of the corpus goes into various instruments, the asset allocation for which depends a lot on the markets. We try to keep a major portion of this portfolio in equities. Considering inflation and increased life expectancy, it is necessary to ensure that the corpus grows at a sufficient rate to take care of inflation-adjusted earnings for the next 30-35 years,” said Maheshwari. Most Equity Exposure Mutual Funds happens through.

“Now, at the end of each year, we withdraw the money required for the next year’s expenses and transfer it to his bank account. Redemption is done based on market conditions and tax expense,” Maheshwari said. “We monitor the portfolio and review it every six months and take corrective action if required.”

Beyond expenses: With a roof over her head, covering medical expenses and monthly expenses, the biggest wish that Preeta expressed is to travel the world. Preeta said, “My travel plans were muted due to the pandemic, but from next year onwards, I want to start the journey.” And, accordingly, his plan is drawn up. “Whenever we get more than the targeted return from equities, those gains are deducted and she can spend it on all her discretionary expenses,” Maheshwari said.

Impact of the pandemic on Preeta’s portfolio: Initially, during the pandemic, Preeta’s entire equity portfolio (about 46% of her portfolio was in debt at the beginning of March 2020) turned red.

However, once the markets started to correct, the funds started coming in.

It takes years of planning to build an adequate retirement corpus. Similarly, during the retirement years, the corpus should be managed with care to ensure that it remains for life.

Your retirement year can be blissful, but only if money is handled carefully.