Retirement Planning
Content
Retirement Planning Challanges
Posted by Prashant Shah on February 12, 2011 Longevity Risk: A successful planner makes sure that post retirement his client is left with adequate money to live rest of the life peacefully and income stream should be set in such a manner so that the money doesn t !et over till the life time" #hen you have planned for retirement, dyin! durin! the time of retirement is less risky than survivin! lon!er" And this really ma!nifies our vision to understand how important lon!evity is for retirement plannin!" So when such plans are made the kitty should be hi!her than the required for the e$pected life" %y this way planner can ensure that money doesn t !et over before the life of the client" Inflation risk: &here is one more enemy of the retirement plans known as inflation" 't normally arises when too much money chases few !oods" 't increases the future cost of the !oods and reduces the purchasin! power" #hile plannin! for retirement inflation estimates plays the vital role because wron! estimation of inflation leads to inferior life to the retired person" (hallen!e here for the planner is to develop a lon!)term vision on the inflation and constant revision of the plan based on the prevailin! inflation" Several other factors to be considered while choosin! the inflation are* Spendin! habits* +etiree buys more services and services cost more than !oods ,edical inflation* ,edical inflation is !enerally twice than national avera!e +e!ional variation* Plan to move to lower cost areas cause inflation is re!ional -ealthcare e$penses are the bi!!est e$pense normally incurred by the retired people" &he lon!er the life e$pectancy, the hi!her are the e$penses" -ence one more challen!e to the planner is to first of all classify routine and contin!ent healthcare e$penses and providin! for the both" So that such contin!encies do not affect the overall livin! standard of the retired person"
Wealth Creation
Posted by Prashant Shah on September 2., 2010
#ealth
can
be
defined
differently
by
different
people"
Accordin! to me wealth involves the buildin! of assets by means of careful investment into asset based investments, usually over a lon! period of time so as to achieve an income stream that will ensure a continuation of a hi!h quality lifestyle in the years beyond retirement" &o create wealth you must follow the follow followin! principles* 1" /ou should start investin! earliest and should not delay any investment decision and implementation 2" +emember that investment does not require timin! but it requires time to !row 0" /ou can compare investments with seed, if you chan!e the soil every other day your seed will remain seed only, they will never become trees 1" Finally reap the benefit of compoundin! 2" 'ncreased years of risk takin! boosts up the kitty 3" 'nvest re!ularly in committed way 4" #ork on asset allocation and should be altered as and when required 5" #ork on risk appetite and your risk appetite should decline with increase in a!e &here are saveral rules which are also required to be followed* 1" Pay your self and invest the payment means invest some money every month for yourself 2" (lear the credit card bills 0" All debt is a bad debt 6Concept: &he debt which creates assets is a !ood debt and which does not is bad debt
Example: ,r" A buys a house on loan, this is an e$ample of !ood debt because he has invested in appreciatin! asset" And at the same time ,r" % lakes a loan for world tour, that s an e$ample of bad debt" Accumulatin! depreciatin! assets, which is not !oin! to increase your earnin!s or productivity, by borrowin! money is an e$ample of bad debt" Suggestion: %e very clear and honest with the classifyin! the bad debt and !ood debt" 't s all about introspection" %ecause buyin! a car on loan can be a !ood debt for one person and at the same time be a bad debt for another"7 1" 8eep check on your loans and if possible wipe off costly loan 2" %elieve in writin! bud!et and try to adhere 3" Set the S,A+& !oals 4" Allow your money work for you
Posted by Prashant Shah on February 12, 2011 Longevity Risk: A successful planner makes sure that post retirement his client is left with adequate money to live rest of the life peacefully and income stream should be set in such a manner so that the money doesn t !et over till the life time" #hen you have planned for retirement, dyin! durin! the time of retirement is less risky than survivin! lon!er" And this really ma!nifies our vision to understand how important lon!evity is for retirement plannin!" So when such plans are made the kitty should be hi!her than the required for the e$pected life" %y this way planner can ensure that money doesn t !et over before the life of the client" Inflation risk: &here is one more enemy of the retirement plans known as inflation" 't normally arises when too much money chases few !oods" 't increases the future cost of the !oods and reduces the purchasin! power" #hile plannin! for retirement inflation estimates plays the vital role because wron! estimation of inflation leads to inferior life to the retired person" (hallen!e here for the planner is to develop a lon!)term vision on the inflation and constant revision of the plan based on the prevailin! inflation" Several other factors to be considered while choosin! the inflation are* Spendin! habits* +etiree buys more services and services cost more than !oods ,edical inflation* ,edical inflation is !enerally twice than national avera!e +e!ional variation* Plan to move to lower cost areas cause inflation is re!ional -ealthcare e$penses are the bi!!est e$pense normally incurred by the retired people" &he lon!er the life e$pectancy, the hi!her are the e$penses" -ence one more challen!e to the planner is to first of all classify routine and contin!ent healthcare e$penses and providin! for the both" So that such contin!encies do not affect the overall livin! standard of the retired person"
Wealth Creation
Posted by Prashant Shah on September 2., 2010
#ealth
can
be
defined
differently
by
different
people"
Accordin! to me wealth involves the buildin! of assets by means of careful investment into asset based investments, usually over a lon! period of time so as to achieve an income stream that will ensure a continuation of a hi!h quality lifestyle in the years beyond retirement" &o create wealth you must follow the follow followin! principles* 1" /ou should start investin! earliest and should not delay any investment decision and implementation 2" +emember that investment does not require timin! but it requires time to !row 0" /ou can compare investments with seed, if you chan!e the soil every other day your seed will remain seed only, they will never become trees 1" Finally reap the benefit of compoundin! 2" 'ncreased years of risk takin! boosts up the kitty 3" 'nvest re!ularly in committed way 4" #ork on asset allocation and should be altered as and when required 5" #ork on risk appetite and your risk appetite should decline with increase in a!e &here are saveral rules which are also required to be followed* 1" Pay your self and invest the payment means invest some money every month for yourself 2" (lear the credit card bills 0" All debt is a bad debt 6Concept: &he debt which creates assets is a !ood debt and which does not is bad debt
Example: ,r" A buys a house on loan, this is an e$ample of !ood debt because he has invested in appreciatin! asset" And at the same time ,r" % lakes a loan for world tour, that s an e$ample of bad debt" Accumulatin! depreciatin! assets, which is not !oin! to increase your earnin!s or productivity, by borrowin! money is an e$ample of bad debt" Suggestion: %e very clear and honest with the classifyin! the bad debt and !ood debt" 't s all about introspection" %ecause buyin! a car on loan can be a !ood debt for one person and at the same time be a bad debt for another"7 1" 8eep check on your loans and if possible wipe off costly loan 2" %elieve in writin! bud!et and try to adhere 3" Set the S,A+& !oals 4" Allow your money work for you
