A reader says, ” First of all, I would like to thank you for your insightful videos, posts & articles. It gives us a different vision to look at various things like continuity of investment, retirement planning, etc. & that too in a “to the point”, transparent, honest manner”.
“You have made several videos for long term investors, but I request you to provide some guidance for viewers like me who have very few years of service left, have not much of accumulated corpus & can’t solely depend on Debt investments like FDs as the corpus is too small. I will request anonymity for obvious reasons”.
“In my case, I will be able to work only for the next 3-4 years; my career was almost a flop (at the moment, I just have 10-15 lacs of corpus including PF, PPF, Shares, mutual funds, etc) & will have no pension. Also, I have a loan-free flat in a tier 2 city & no responsibility (all alone, no marriage, parents expired a few years back)”.
“So how should I plan for the next four years & life after that to be able to live comfortably (not luxuriously)? Thanks again for your guidance”.
First, let us address this: “can’t solely depend on Debt investments like FDs as the corpus is too small”.
Since the corpus is small, you cannot afford to take capital market risks. Aside from a small emergency stash, a good chunk of it must be used to buy a life insurance annuity to guarantee at least the essential expenses.
To be honest, I don’t think you can live “comfortably” with this corpus. You will have to aim for an extremely frugal existence from today.
Ensure you have private health insurance for at least Rs. 10 lakhs with a Super top covering beyond that (Rs. 50 – Rs. 100 lakhs depending on affordability)
Take care of your health because if you can, you must work beyond the next four years to supplement your pension. I would recommend going for regular annual master checkups (extensive blood work, abdomen USG, ECG, etc). This is all the more important because you are staying alone.
How do you invest in the next four years? Keep your expenses low and invest as much as possible – about 80% in fixed income and 20% in equity. You can do this in your existing mutual funds. You can get a little more adventurous and increase equity exposure, but this can backfire, and you don’t have that kind of time on your hands. A fund like Parag Parikh Conservative Hybrid may fit this situation well.
The most essential step now is to figure out what you will do after you retire from your regular job. You must find employment somewhere or use your skills to train, freelance, consult, etc. This income will be your ticket to a comfortable life after retirement.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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