3 Ways to Invest Your Retirement Money | CA Rachana Ranade - YouTube

Well today, I am going to tell you a story,  a story of an ant and a grasshopper. When it  

was a nice sunny day, the grasshopper was  merrily singing certain nice tunes and he  

was enjoying the weather while, on the other  side the ants were very busy gathering food  

so that they don't have to face a problem  on a rainy day. Then what happened that,  

the rain started and when the rains were  pouring heavily, the ants were enjoying the food  

in their own small home. Poor grasshopper, what  might have happened to him? You want to see that,  

the grasshopper is also merrily enjoying food,  

because he's not the grasshopper of that original  story, he's the next gen grasshopper, he knows  

how to plan for his future, maybe he's seen my  lectures and that's why he's a smart grasshopper.  

Hey folks, CA Rachana Ranade here and I welcome  you all to a brand new video which is about  

how to park your retirement corpus. I am sure  that grasshopper hasn't still left your mind,  

you might be wondering how did he get that  food, so it's all about proper planning,  

proper goal setting and if you're still  not aware about how to set smart goals,  

just have a look at this lecture whenever time  permits and I am sure that that grasshopper  

might be very very keen on learning, he might  have set his retirement goal very nicely,  

that's why he was able to enjoy the summer  as well as the post retirement phase.

Well now, it's time to press the reset button,  why? Because you were in the accumulation phase  

of your life till now but, right now we're  assuming that you have already reached that  

retirement phase and now, you're going to go into  the decumulation phase. You might be wondering,  

what is this? So this video, to be very honest, is  not targeted for people who are in 20s or in their  

30s, this is more targeted towards people who  are at their retirement age of let's say 60 years  

or even if you are 30 years, maybe, you can  definitely watch this video for your parents  

right, because they are going to be the ones who  might receive a lump sum amount at retirement  

and then they might get confused as to how can I  park these funds so that I can decumulate them, so  

that I can utilize them, withdraw them very nicely  and lead a very comfortable life post retirement.  

So just to give you one more quick clarification,  accumulation phase happens when you are working,  

whenever you are keeping that small part of  your income so that you can easily retire early,  

retire rich and now once you have  reached this retirement phase,  

now it's all about withdrawing your  investments and leading a peaceful life.

Many times people ask me on WhatsApp or through  emails that Rachana, we have received an x amount  

as a lump sum retirement amount, now where  should we invest this. If you really ask me,  

there's no single answer for that, I will give you  an example for this as well. Assume that there are  

three friends a, b and c. Almost 25, 30 years ago,  all had decided that when we retire, we should  

have a retirement corpus of one crore rupees and  today all of these three people have retired.  

Budgeted amount was how much, target amount  was one crore but, let's understand actually  

what have they achieved, Mr. A saved only 30  lakh rupees so I can say today his investment  

corpus is just 30 lakh rupees, for b it is 90 lakh  rupees, 90 lakhs is very close to the target and c  

has managed to invest two crore rupees for his  retirement. Now you only tell me one thing,  

can I give them one single strategy or  the strategies have to be different?  

Answer is, the strategies have to  be different but what will be the  

strategies is exactly what we are going  to discuss in the next part of the video.  

So now let's understand all these three cases one  by one. The very first one, if you remember is of  

Mr. A, whose target saving for retirement was  one crore but he actually ended up only with 30  

lakh rupees. Now what do you think, out of these  three strategies, what should be his focus on,  

should it be on income generation, on corpus  protection or on corpus growth? Ideally, it should  

be mainly on income generation and of course  on corpus protection. He can't take the risk to  

grow his corpus by putting his corpus in risky  instruments like equity post retirement right.  

So what are few solutions for Mr. A, solution  number one, unfortunately he will still have to  

make a point to earn additional income, now how,  if he is a skilled person, he might still give  

some certain consultancy services and earn money  Possibility number two if that's not, I mean if  

that's not doable, maybe if he's staying in his  own house, he can sub rent a part of his house,  

so let's say he can have a paying guest to whom  he can just give like one bedroom of his house,  

something like an Airbnb model, can be operated  by him as well right. One more possibility is  

that if he is able to cut down luxury to  almost zero percent levels, then he will be  

able to survive through his retirement and one  last point which he will have to do is that,  

even if he's spending on essentials, he will have  to spend on the essentials very very tightly. So  

I hope all the young viewers out there, they  might have understood that come what may,  

I don't want to be Mr.A post retirement. Now let's  go to the case of Mr. B, his targeted saving for  

retirement were one crore rupees and how much did  he end up saving, he ended up saving 90 lakhs,  

almost hitting the target right. What should be  his focus on? His focus should be on number one  

corpus protection, because he's almost there.  Now, he doesn't want to lose the corpus but,  

simultaneously he also wants to generate certain  income. So for that what will he have to do,  

number one, he should ensure as I mentioned that  his capital is not eroded, so, for that can he  

invest in equity, direct equity? No. He has to  ensure that capital is not eroded number one.  

Number two, can he still afford a slight amount  of luxury, why not slight amount of luxury is  

affordable because he's very close to his target  and number three, what he can do is that he can  

invest a part of his funds in something like  a conservative fund wherein, 75 to 80 percent  

exposure is given to debt and a very minor  portion is it is actually allocated to equity,  

so I can say that corpus growth can be a very  very slight point which may be considered but,  

again I am repeating, major focus on what, major  focus on corpus protection and income generation.  

Let's move on to case number c. For case number  c, he's at the most amazing position because his  

target saving was one crore he has ended up saving  to crore. Does he have to really bother about  

something right now, no. Can he actually live  his retirement life in luxury, absolutely yes.  

Can he invest in equity as well, this person,  yes, why not, because for him capital protection  

is not very a big running crisis, he also has  surplus corpus. So he can risk out some of his  

money in equity. Now whether in direct equity or  in equity mutual funds depends on his knowledge  

right. So after understanding all these  points, I hope you have understood that Mr. C  

has two further possibilities, possibility number  one if he lives to the age where he had predicted,  

let's say he had predicted that he lived  to 70 and if he lives only till that age,  

he will be able to keep some corpus even  for his nominees, for his legal heirs.  

If he outlives his expectation so for example he  had planned that he will die at 70 as an example  

and he lives till 80, still will he have  the corpus to live that additional 10 years,  

yes, because he has that additional quotient. So  all those youngsters out here watching the video,  

I hope you understood that you surely love if you  are Mr. C while you are at your retirement age.  

Well before we move ahead to understanding the  various investment options available, we have  

to understand two prerequisites, which are these  two, number one, even if you are in the retirement  

phase, very very very important is the emergency  fund. Now what is emergency fund, it's something  

like you should have almost three to six months  of your expenses very easily available with,  

you it could be in your savings account, it could  be in your FD, okay it could be in liquid fund but  

it should be very much easily accessible. If  you want to know more about emergency funds,  

I have already made a video on that you can check  it out later. Number two, very very important,  

you should have a health insurance because as and  how you grow more in age, chances that you might  

face illness, you might face hospitalization  or a shade higher so, you must have a proper  

health insurance. If you want to know more about  health insurance again I have made a separate  

video on that, I have recently released this on  the channel. So be sure that you have knowledge  

about both these two points and then only move on  to understanding the various investment options.

Emergency funds ticked off, health insurance  ticked off, I am not saying tic toc, ticked  

off okay. Now with this let's move on to the  government schemes and we are going to focus on  

three schemes. The very first one is SCSS, senior  citizen saving scheme. The second one is PMVVY  

which is the Pradhan Mantri Yaya Vandana Yojana  and the last one is POMIS which is post office  

monthly income scheme. Well to be very honest, the  first two are absolutely retirement focus schemes,  

the third one can be opened even by people who  have not attained the age of 60. So for example,  

if I want to open a POMIS, I can, I can also open  it in the name of a minor as well okay, but, then  

why are we discussing it here, because it offers  a benefit of a monthly income scheme, that's the  

reason why I am discussing it in this section  right. So let's understand all these three one  

by one. Where can you open an account under SCSS,  it can be opened up with any authorized bank or a  

post office, for PMVVY it is solely operated by  LIC. So if you want to open an account, you have  

to approach an LIC agent or you can go directly  to the LIC office. For a monthly income scheme,  

you have to open it with a post office I mean, you  have to go to a post office and open an account.  

Eligibility for SCSS, ideal eligibility is 60  years but with certain uh conditions so for  

example, if you have taken a early VRS, a special  VRS, then age limit is taken down to 55. If you  

are a defense personnel, the age limit is taken  further down to 50 right, for PMVVY, it's a flat  

age of 60 years and for POMIS as I mentioned,  there is no age limit even a person of 20 years,  

30 years, 40 years, 60 years also can open  this account right. The next one is about term  

tenure, for SCSS it is five years and it can be  extended to further three years for VVY, it is  

ten years and for POMIS, it is five years. How  much are the interest rates? For the first two,  

interest rates are seven point four percent  for the quarter one of 21, 22. So what does  

this mean? Can the government change these  interest rates periodically, unfortunately,  

answer is yes. Can they do a downward revision,  yes, can also they do an upward revision, yes  

okay, but, recent past may they have been in  a downward trend okay but, still I can say  

that seven point four percent right now is not  bad at all, okay. When you get paid out is the  

big question now, if you're talking about SCSS,  you get paid out quarterly, for VVY, you get, you  

have an option you can choose monthly, quarterly,  half yearly, yearly whatever and for POMIS,  

as it's a monthly income scheme, it will be paid  out on a monthly basis. Minimum deposit, maximum  

deposit is very well mentioned in this table you  can see here, minimum is 1000 and its multiples  

maximum is 15 lakhs. For VVY, 1.5 lakhs for a  yearly pension and 15 lakhs for a monthly pension,  

for post office MIS, it's thousand and it's and  it's multiples and for maximum amounts it is 4.5  

lakhs if it's a single account and 9 lakh if it's  a joint account. There are certain clauses about  

withdrawal and penalty as well, if you want you  can just press the pause button, read out the  

penalty and withdrawal clauses and then again play  okay. So it's nothing like to be taught as such.  

For taxation, for SCSS, PMVVY both are eligible  under ATC, for POMIS it's not eligible under ATC.  

If you check out, for all these three schemes, the  aim is common and what is the aim, aim is income  

generation and corpus protection. Is there 100%  corpus protection, yes, because all three schemes  

are somewhere related directly to post office or  to the government, so it's as good as saying that  

government defaulted ,very rare scenario right. So  in this case, I can say that corpus protection is  

absolutely guaranteed, so go back again to case a,  b and c. To whom is this absolutely suitable for,  

it is absolutely suitable for the case a  category. Can case b, can Mr. B also invest  

some part in this, absolutely yes, why not. A  little less as compared to A and for c this,  

can be a comparatively lower amount which  can be invested in these three schemes.

So I hope you have understood very well about  the government schemes. Now let's move on to  

investing in mutual funds. Ff you remember, I  told you that depending on the risk appetite,  

one can choose whether he should go for a debt  fund or to a balanced fund, in that also we talked  

about a conservative fund, you remember when I  said 75 to 80 percent exposure will go to debt  

,only that balance small small portion to equity  and the third one can be actually investing in  

equity oriented funds but, that was for whom a?  b? for c, because he had a lot of surplus corpus  

as well right. So let's understand one by one if  I am talking again about Mr. A. is this option  

available for him, none, neither debt, nor equity.  Ideally, you should go ahead with a very safe  

government scheme point only right. If I am  talking about b, can b invest a part of his  

corpus in debt funds, answer is yes, why not, he  can do that. Now if he is interested in income  

generation, what he can do is invest in debt  fund and then go ahead with an SWP, what is SWP,  

systematic withdrawal plan. So like in SIP you  transfer x amount monthly to that investment  

that is mutual fund right, instead of investing  monthly, here you withdraw monthly that is known  

as a systematic withdrawal plan okay. So what is  step number one, invest one chunk in debt fund  

at one shot and keep on withdrawing part by part  every month, that will give you a steady flow of  

income per month right. Possibility number two,  if you want to go ahead with investing in equity,  

now invest in equity was for whom ,ideally for  Mr. C so now, let's understand how c will plan  

his investment in equity mutual funds. Is he  going to directly invest in equity mutual fund,  

no understand how he would do it. So assume  whatever chunk he has decided, first the entire  

chunk will go in a debt mutual fund right and from  the debt mutual fund, money will be systematically  

transferred to the equity oriented mutual fund.  So this is not called as an SWP, it is called  

as an STP that is nothing but a systematic  transfer plan. So what will happen in this,  

it is as good as an SIP only, but SIP is when?  When you pay out of your own pocket every month,  

in STP what happens, money has already gone out  from your pocket you know it's there in the debt  

fund, it's parked in the debt fund. Now money  is only being transferred from a debt fund to  

an equity fund. I hope you have understood what is  a debt fund, who should invest in a debt fund. If  

you remember we also talked about a conservative  fund, a hybrid fund, we did talk about investing  

in equity oriented mutual fund that was mainly for  Mr. C, we also talked about SIP, SWP, STP wow, but  

wait, still one big question remains how to choose  which mutual fund, for that, I have a separate  

course on magic of mutual funds so you can surely  think about investing in this course, you'll get a  

lot of knowledge about how to choose a mutual fund  and so that you can invest with full confidence.

Let's move on with our last investment  avenue, which is investing in equity,  

my favorite one right. But then, is it  applicable for Mr. A, no, b, no, for c,  

yes. But then, how? Can you invest directly in  equity ,that depends on whether that person has  

that much knowledge on equity or not. If he does  not have knowledge, he can acquire that as well.  

I will definitely like to share a very nice  experience which I had. So whoever enrolls for  

my courses on various like basics of stock market,  fundamental analysis, technical analysis whatever,  

I do conduct a zoom meeting sessions every  month with all these participants. There is  

one participant named Shashi and she is I guess  60 plus years. She has been a scientist, has zero  

commerce background but then, post retirement she  said, I would love to learn about stock markets.  

She has learned a lot about stock market, she  keeps on asking me questions every month and I  

am so happy to answer her questions. That's how it  shows that there is no age barrier for learning,  

so if you still believe that you have that  enthusiasm for learning, age is just a number,  

right. So, what you can do if you have that  knowledge in stock market ,you can invest,  

if you don't have, acquire the knowledge first and  then invest in stock market but again coming back  

to our case study, this one is not applicable for  a, b it's applicable only for c. Next option can  

be investing in Nifty bees. So if you don't know  what are bees, what are Nifty bees, I have already  

made a separate video on that. I have talked  about various types of bees like gold bees,  

Nifty bees, bank bees, in that video you will  get a detailed input on what are nifty bees.

You might stop working, but, your  money might not stop working,  

If, you have parked it efficiently. I hope  you have enjoyed this video. If you have,  

don't forget to share it with your friends  till then take care, Jai Hind and bye bye.