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NSE Invest O Cast episode 12: When and how to start planning your retirement

Planning your retirement will require you to define clearly what it means to you and making an investment plan that has a high probability of you achieving your retirement goals whether that goal is early retirement or conventional retirement.

Moneycontrol Contributor @moneycontrolcom

Hrishi K: Hello and welcome to NSE Presents: Invest – O- Cast (An exclusive investor podcast) Powered by MoneyControl. My name is Hrishi K and I'm your host on this podcast, it is all about getting your money to make better investments for you in the new financial year.

Retirement can mean different things to different people. Regardless of what it means to you, there are few things that you have to do, to make sure you can have a comfortable and rewarding life post retirement.

It does take some planning, understanding, putting a timeline and setting up a regular budget to make sure that a good retirement corpus becomes a realistic possibility.

Planning your retirement will require you to define clearly what it means to you and making an investment plan that has a high probability of you achieving your retirement goals whether that goal is early retirement or conventional retirement.

Early retirement planning is identical to conventional retirement planning with one big exception – time. What this means is you have a shortened, accelerated financial preparation phase, and an extended, post-retirement spending phase when you retire early. Thankfully, starting early and making compounding your best friend can help you achieve your dreams of early retirement as well.

In today's episode of Invest - O - Cast we are going to be talking about planning your retirement and what it takes to make sure you have a secure future when it comes to money with the help of advice from the industry expert of the day.

Hrishi K: National Stock Exchange (NSE) with the help of Invest – O – Cast (An exclusive investor podcast) Powered by Moneycontrol is committed to break the limitations of geographic boundaries and reach investors across the country. In today's episode we talk about, planning your retirement early.

To help us with this, I have with me Ms Kiran Telang, a certified financial planner registered with SEBI. Kiran has gained tremendous goodwill and trust of her clients by working to help them achieve their financial goals and simplifying their financial lives.

Hrishi K: Welcome to the show Kiran!

Ms. Kiran Telang: Thank you Hrishi.

Hrishi K: We are very happy to host you on the show and we would like to know more about you and also your efforts behind financial education and awareness in India.

Ms. Kiran Telang: Well I am Certified Financial Planner and I have been working with the individuals to help them plan their finances in a simple manner because things are getting really complicated now with many options available for investment and people are getting more and more confused as to what decisions has to take regarding their money. So as far as financial planning awareness goes, I am writing in the media, I do talk shows, I talk to corporate, I do some social media campaigns as well and help people simplify the jargons in finance and try to understand and explain to them in simplified manner what is good for them and what decisions they take regarding their own money.

Hrishi K: Kiran you started your career in the world of finance in over 2 decades ago 1998 to be exact, did you think about retirement in the beginning in 98 or did you start planning it later from your first job? How did it work?

Ms. Kiran Telang: Oh! Well 1998 it was totally different world, retirement planning or retirement per se wasn’t in my vocabulary then and I was like any other fresher just out of college, no work experience and retirement was something which was not in my radar anywhere close. So the retirement planning actually started much later when I started understanding the picture, the nuances of investments, when I did my ‘Certified Financial Planner’ course. What happened in the beginning when I passed out of college most importantly was something that came from my upbringing, I had seen parents invest and you know save regularly so that was ingrained in me. So even through my first salary I started saving and investing although my choices were very traditional things like ‘Fixed Deposits’ and ‘Recurring Deposits’ and ‘PPF’, so these were where I began and these are very traditional thing which most people even began today because knowledge doesn’t come without having actually practical experience in the world of money. So that is how I began in retirement planning.

Hrishi K: Well, those were very candid thoughts Kiran. You are listening to NSE Presents: Invest – O- Cast (An exclusive investor podcast) Powered by Moneycontrol that is here to help people learn about their finances on the go. Kiran we would like to understand more from you on retirement planning? Especially, when to start and how to go about it?

Ms. Kiran Telang: Hrishi what I would say is that most people are not able to figure out or understand how serious retirement planning as a requirement is. It is one of the biggest goals that an individual can have. If I give you an example to give you certain numbers let us look at a 40 year old living in a metro city probably have an expense a lakh a month, so he would like to continue the same lifestyle when he retires. Most people will not be able to fathom that this person will need a retirement corpus of 12 crores which is a really huge number. So even if you account for your PF or your traditional investments that you have done, you will not be able to reach this figure, the only way to reach this figure is through proper planning and investments in as a classes or products that will help you achieve a higher rate of growth which will keep on beating inflation over a long period of time. So that is a very very key concept in retirement. Now when do you start retirement planning? I would say as early as possible, even with a first salary or even if say you’re just a beginner may be getting a salary of 10 thousand a month. It is not very difficult for that person to save 10% say 1000 rupees a month and he can start with as small as 1000 a month and if he continue so if he is starting at an age of 22 and he is retiring at 60 that is 38 years of investment time. Thousand rupees 38 years assumed the rate of return 12% in equity you make 92 lakhs and if this person is disciplined enough and if he increases his investment every year by10% the final corpus will be 2.67 crores which is a huge numbers for a saving of s small as 1000 rupees. So I think you should start as early as possible with whatever amount you can save.

Hrishi K: What are the most important things that people should keep in mind while planning their investments for retirement? And another way of approaching this is what should be the asset allocation?

Ms. Kiran Telang: Well asset allocation is something which will depend on a lot many factors very specific to individuals and families. As far as retirement planning goes I think it is important to understand one statistic. Like I spoke earlier you start working at 22 and you work till 60 that is 38 years and the earning that you are having at that period will sustain your life for those years plus all the years after you retire. So suppose you are going to live till 90 so that makes it 38 plus 30 that is 68years, so you earn for 38 years and you spend for 68 years I mean if you are not serious about that statistic - god help you. So you need to begin as early as possible you need to start something like equity which is one as a class that will help you beat inflation over a long period of time and it is the best to start when you are young because you are able to take that risk, you don’t have much responsibilities at a younger age. As you approach retirement you can probably do down a little on the equity portion and increase your exposure to debt instruments but that balance needs to be continued till the age towards retirement at the initial stage I would even say that would be really great for retirement planning.

Hrishi K: How can people use the power of compounding to the maximum for their investments?

Ms. Kiran Telang: So let us look at basic formula of compounding that we studied the school. So this formula has got 3 important aspects one is the Principal, second is the Rate of Return and third is the Time. If you look at this formula it is really in control. The principal that is basically that the amount that you are investing, so I said earlier at the beginning it is a great to go thing, second part is the ‘Rate of Return’ now you don’t have any control what a fixed deposit will give, what kind of return an equity investment will give you but what you have control over is what aspect what class can you choose in investing. So if you are choosing something like a ‘Fixed Deposit’ which will give you a lower risk and a lower return or you choose equity investment which comes with higher risk, higher volatility but also higher return. The third aspect is ‘Time’. So time the more number of years you have at hand it will be easier to collect a corpus. To get power of compounding you need to start as early as possible and invest in asset classes and give you rate of return which you are comfortable with.

Hrishi K: Starting early is the key there is no doubt about that, but at least we to answer, leaves you to answer and me to answer ask the other question. What about people who start planning this whole retirement process which is very very late? They miss the bus but can they catch up with that bus?

Ms. Kiran Telang: See there is no right time to start planning so even if you wake up late you decide and you realize that you need to start planning it is a good time. What happens with the delayed start is there are more complexities which come in so for the age of 50 you realize that you have not done any preparation for your retirement and you are ready to fall short of your retirement corpus. There are only 4 key things that you can do. One is earn more, second is spend less, reduce your goal and fourth is more risk in your investment. So move from fixed income from equity investing. So for each individual a combination of these things can happen. You can decide what the best solution is for you. For each individual answer will be different. At 50 typically what happens is you are done with your major responsibility in terms of college and education stuffs we are likely to have more disposable income you can invest, so that is basically equivalent to earning more, investing more, spending less of course, it is in your hands whether you want to splurge on things that make you more comfortable we want to save more retirement. As far as taking more risk in investment goals it entirely a risk profile. Certain people will have sleepless night if their investment erodes in value at any point in time, so for those people those options will be very difficult. So they will have to do with either earning more or spending less. Another thing that we look at for people to start late is can they increase their years of working, so can they go beyond 60 you know work for a little more so that they have more time to save and they will be withdrawing at a later date from the corpus that they have accumulated, so it is a combination it does get complexed but it is not impossible.

Hrishi K: Let’s talk about the idea of having an emergency fund now. I am sure a lot of young people will need advice on this the emergency fund.

Ms. Kiran Telang: Oh! Yes emergency fund is a very very important thing that every person needs to look at. Typically when we think of emergency fund what comes to mind first is the medical emergency. But in current scenario what I foresee is more than medical emergency you have job loss kind of scenario where there is no income coming it but the expenses are going on. So you will obviously as a family you will have EMIs going on, you have kids in school who’s fees has to be paid and you have health insurance payments to be paid you have life insurance premiums to be paid. So even if there is no income these expenses do continue and that is where your emergency fund will come to help you. On the positive side you also have things like when you have sabbatical higher education or you want to become an entrepreneur, so what you do to be prepared for that phase where income is not likely to be there and you still have those expenses going on, so that again is being fulfilled through emergency fund. Now how much do you need to save as an emergency fund? So there is couple of things that you need to keep in mind. Though the thumb rule says it is 3-6 months but it will change depending on what kind of expenses you have and what is the industry that you are working in. For e.g. if somebody is working in an industry where jobs are getting scarcer by the day it is likely that you will spend more time when you have a job loss and getting another one at the same level. So your time without an income will be larger again depending on your level of experience. So for a fresher it is easier to get a new job then a person at a senior level. So probably a person at a senior level need higher amount to be kept in emergency funds. As it is said that ‘Personal finance is more personal than finance’.

Hrishi K: Very well put and finally, let’s have some quick points from you for our listeners to definitely keep in mind people who are looking to plan an early retirement.

Ms. Kiran Telang: So of course someone who is planning for retirement beginning very early in their career. As I said don’t wait till you have a big salary. Start even if you have small keep your retirement fund sacrosanct so even if you have a job loss there are emergencies try not to dip into your retirement funds use alternate sources use your emergency funds, do not dip into your retirement funds. If you think you are the kinds of person who is not disciplined to do this, get into things that have a lock in period where you cannot touch your retirement funds till you are retirement. Even a small amount can become a bigger over a period of time because of power of compounding do not forget that and please keep on investing on a regular basis.

Well today’s podcast has been extremely insightful for our listeners. It has definitely given me insights to go back and plan a few things.

And now, I am going to take you all of our wonderful listeners through some key points listed by our guest Kiran Telang in our “Wisdom in the bank” segment. Hope you all find them useful and will definitely implement them in your life.

  • Set an example for your children so that they understand savings and investments at an early age

  • Factor in inflation when you calculate your retirement purpose

  • Start as early as possible

  • A One thousand rupees saving starting at the age of 22 and you can continue saving till the age of 60 will give you 92 lakhs. Increase this by 10% every year and you could end up with a corpus of 2.7 crores.

  • Asset allocation is a personal and private thing go full equity when you are young and have fewer responsibilities more debt as you approach retirement.

  • Use the power of compounding by trying to assume control or what is in your control.

  • No catch up in investments, earn more, spend less adjust your goals. Take higher risk depending on what phase of the life you are in.

  • And depending on your investing opportunity make a combo of all the above.

  • 3-6 months are the thumb rule as far as the emergency fund is concerned but you have to factor in medical emergencies and a jobless situation, hence increase that.

  • Entrepreneur goes abroad for higher studies you will need to increase your emergency fund.

  • You industry and level of seniority is another factor that you need to look at while planning your emergency fund.

  • Start small and start early at a basic level that investment amount should be sacrosanct irrespective of what happens.

Kiran thank you so much for being on the show today. It was a pleasure. I am sure a lot of people who were keeping retirement decisions on the fence will finally be able to take the plunge with the help of your advice.

Ms. Kiran Telang: Thank you Hrishi it was a pleasure.

Hrishi K: The early bird catches the worm. It stands true even in the case of retirement planning. Your early 20s and 30s are a great time to start investing, as you start earning money and have that little bit more that you can invest. But even if you have just thought about it, proper planning, understanding of your investments and goals can help you realize your early retirement dreams. After all, there is so much more you can do beyond a job right? Start planning today, seek advice wherever you need it and make sure you stick to your goals.

And that is a wrap on our show NSE presents Invest-o-cast! I'm your host Hrishi K for the NSE Presents: Invest – O- Cast (An exclusive investor podcast) Powered by MoneyControl. To know more about our podcast, log on to and visit the podcast section. In case you would like us to address any of your investment queries on our show do write into us at: that’s You can also reach out to us on Twitter @moneycontrolcom or Facebook , do remember to use #nseinvestocast #nseinvestocast.

Thank you for listening!
First Published on Mar 15, 2019 11:15 am
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