Friday, August 3, 2012
How to plan your investments once you are retired?
This is a guest post written by Manikaran Singal who is a certified
financial planner and runs a personal finance blog - Good Moneying.
Retirement is very important and critical stage in one’s financial
life. This stage can be made more enjoyable where you relax, spend
time with family, pursue hobbies if you have properly planned for
that. But it can be most horrifying phase also where your regular
income stream is no longer available, with no pension provision and
where you have not saved enough to take care of your retirement needs.
Due to the various challenges and risks associated with retirement,
we recommend retirement planning should be given its due importance
and starts as soon as possible.
Retirement Planning works in 3 steps – Accumulation – Preservation-Distribution.
Accumulation is the stage where we invest to generate a decent corpus
which is assumed to take care of us during retirement years. This
accumulation we do till retirement.
In Preservation stage we become cautious about our accumulated corpus
and we start coming out of risky asset classes and start shifting the
corpus into debt, though savings doesn’t stop during this stage also,
as our regular income stream is intact.
Distribution is the stage when we make arrangements to use the corpus
through interest, dividends and withdrawing capital which we have
accumulated.
In the complete retirement planning, distribution is the most
important of all, as all our efforts of accumulation and preservation
were directed towards this stage only. With a regular income stream no
longer available, the savings made over one’s working years now have
to provide for all needs. Now your investments need to create a
paycheque for you. In accumulation and preservation stages the
mistakes can be ignored as you were getting regular income, but at
distribution stage, small mistakes can cost huge.
Through this article, I will be discussing with you on the
distribution stage of retirement planning and how you can plan your
investments once retired.
1. First step is to prepare you on the risks front. Like :
a) Longevity risk: We don’t know for how long we are going to
live. Whatever life expectancy you have assumed during accumulation
stage may not be correct. If you outlive that age and not used your
corpus judiciously you may find yourself in financial soup.
b) Health risk: At this age probability of health problems is much
more. We don’t know till when health remains favorable on our side.
And when it gets unfavorable how much of our accumulated corpus it may
wash away.
2. Have a look at your expenses.
This is very important as the ultimate target is about to generate
comfortable income stream from the corpus to meet the basic and
desired expenses easily. Here you may divide your expenses in 4 parts:
Basic/desired/on dependents if any/Loan EMIs if any. Basic would
include the family’s general and unavoidable expenses which may
include the family gifts on various festivals/occasions, desired is
what you want to do after retirement like going on annual or bi annual
vacations, pursuing some hobby, some charitable or religious activity
etc., On dependents means…situations where children are still studying
or are not yet settled in life etc. and Loan EMIs.
3. Investment Options.
When you have calculated how much is required, now is the time to look
out for the options where you may park the lump sum amount to start
getting regular income. Here one thing has to be noted that one should
not ignore the growth aspect in investments and should give equal
importance to that. To add to it, one should not get into wrong
products with the lure of making fast money in the name of growth.
Just reminding you again that mistakes made at this stage of life may
prove very costly.
Make 3 investment buckets by investing corpus in different percentages.
Basic Bucket (50% -60%): Looking at the monthly requirement and
pension inflow if any, one has to plan to fulfill the gap, for which
one may use the products like Post Office Monthly Income scheme,
Senior Citizens savings scheme , bank fixed deposits with
monthly/quarterly pay-out options, Immediate annuity etc. I mean use
those products which can supplement your monthly inflow. But here do
keep in mind the taxability aspect also. All the so called safe
instruments are taxable. So where the taxation crosses the
acceptability criteria, then you may use Mutual funds Monthly income
plans or park the amount in debt mutual funds and start systematic
withdrawal plan, but please note in the latter you are withdrawing the
capital part of corpus which should be last resort.
Health Bucket (10%-15%): After arranging for your current monthly
requirement, put some percentage of your corpus into debt mutual funds
or cumulative fixed deposits as a health fund which will take care of
your those medical emergencies where expenses jumps over health
insurance coverage.
Growth Bucket (20%-25%): Put the balance corpus or at least 20% of the
total corpus in equity oriented Mutual funds diversified or index, to
cope up with the inflation aspect and After every 5th year transfer
the growth portion into the basic bucket, so the monthly income can be
supplemented and put it in line with the increased expenses.
Some Do’s and don’ts after Retirement.
Do review your financial situation every year.
Do buy adequate health insurance coverage for yourself and your
spouse. Count the annual premium in the basic expenses.
Don’t buy or gift any investment product to any of your family member
other than you or your spouse. Avoid gifting child plan to
grandchildren etc. Don’t part with your savings in your lifetime. You
will be soft emotionally gullible target to the sellers. So beware.
Do keep working even after retirement.
Shocked!! But in many cases it becomes inevitable especially when you
still have dependents, or paying Loan EMIs. The idea is not to enter
retirement phase with the burden of Debt and dependents, and not to
use the nest egg on these areas. Also please understand that stock
trading is not working.
Do take good care of your health. If at all you have any health
problem better to take proper treatment. Many times I have seen people
ignoring the health aspects due to the finances involved in the
treatment. But please understand that your health is equally important
for your wealth.
Don’t overspend in retirement if you have not over invested while working.
Don’t put your retirement corpus into Real estate due to the illiquid
and unregulated nature of investment.
Retirement planning includes much more than just investing. It needs
some behavioral adjustments also. The ultimate goal is steady,
dependable and lasting income. With careful planning we can balance
the needs of inflation protected income and long term growth during
retirement.
Why the Sky is Blue
Today it found out why the sky is blue. For the short answer, when light
from the sun enters our atmosphere it collides with molecules in the air.
The blue part of the light gets scattered more than the other parts during
these collisions and thus makes the sky appear to our eyes as blue. If the
light from the sun took a straight path down to our eyes with no scattering
or absorption in the atmosphere, the sky would in fact look much as it does
at night in the day time.
So a little background. White light waves from the sun are in fact
mixtures of all colors of the light spectrum. Anyone who’s ever had a
prism knows that when white light shines through it, the light gets
separated and you get a rainbow spectrum showing up on the other side.
Humans can only see a portion of the total light spectrum of energy; we
see from Violet, which has a wavelength of about 380 nanometers, to red
which has a wavelength of about 720 nanometers. Descending from red to
violet, we get orange, yellow, green, blue, and indigo between the two.
Another needed piece of information is that the atmosphere of the earth is
made up of almost all nitrogen and oxygen.
So specifically, what is happening here is that because the wavelength of
blue light is about the same size of an atom of oxygen, which makes up 21%
of the earth’s atmosphere, blue light gets scattered by these oxygen
molecules while the reds, oranges, and others more or less pass straight
through the atmosphere without being scattered much at all. So when you
look up at the sky, everywhere you look looks blue as the blue portion of
the light spectrum bounces off an oxygen molecule and into your eye.
It actually turns out that the earth’s atmosphere is also scattering quite
a bit of violet light as well. So why doesn’t the sky look more like a
blueish/violet? This is for a few reasons. Most important is that our
eyes are most sensitive to blue, red, and green. So our eyes are naturally
more inclined to respond to blue over violet. Also important is that the
sun doesn’t put out light at the same intensity at all wavelengths of the
spectrum. In addition to this less amount, some of the violet also gets
absorbed in the upper atmosphere; so not as much of it gets to our eyes.
So it turns out more or less a combination of these three things makes it
so we see the sky as blue instead of violet or blueish/violet. It is
interesting to note however, that our eyes are picking up some of the
violet and indigo being scattered. Without this, we would in fact see the
sky as more of a blueish green. This is because the green cones in our
eyes respond to the small amounts of scattered yellow light wavelengths to
some extent; meanwhile our eye’s red cones respond to the indigo/violet
somewhat which balances things out a bit and so we only perceive the blue
being scattered.
So you might now be asking, “Why is the sky red or orange when the sun is
setting?” What’s going on here is that as the sun is setting, the light
you are seeing from it is having to travel through a lot more atmosphere
given your angle to the sun. Light at lower wavelengths gets scattered
more than at the higher wavelengths. So less of the blue light gets to you
as it’s being scattered more than, for instance, yellow, orange, and red.
In this case, if it is a relatively clear day, the sky will appear more
yellow than blue as you watch the sunset because the blue is being
scattered so much it never reaches you or at least, not as much of it, but
the yellow isn’t scattered nearly as much but still scattered enough to
make the sky look yellow. If it is dusty or there are a lot of other types
of particles in the air along the path to where you are looking at the sun,
the sky will appear more red. If there is a lot of salt in the air, such
as at sea, it will appear more orange.
So, if there was no scattering or absorption, the sky would appear black in
the day time. If there was more absorption or scattering going on than
there is, then the sky might appear to us to be yellow, orange, or red all
day long.
CUCUMBER
1. Cucumbers contain most of the vitamins you need
every day, just one cucumber contains Vitamin
B1, Vitamin B2, Vitamin B3, Vitamin B5, Vitamin
B6, Folic Acid, Vitamin C, Calcium, Iron,
Magnesium, Phosphorus, Potassium and
Zinc.
2. Feeling tired in the afternoon,
put down the caffeinated soda and pick up a
cucumber. Cucumbers are a good source of B
Vitamins and Carbohydrates that can provide that
quick pick-me-up that can last for
hours.
3. Tired of your bathroom mirror
fogging up after a shower? Try rubbing a
cucumber slice along the mirror, it will
eliminate the fog and provide a soothing,
spa-like fragrance.
4. Are grubs and slugs ruining your planting beds? Place a few
slices in a small pie tin and your garden will
be free of pests all season long. The chemicals
in the cucumber react with the aluminum to give
off a scent undetectable to humans but drive
garden pests crazy and make them flee the
area.
5 Looking for a
fast and easy way to remove cellulite before
going out or to the pool? Try rubbing a slice or
two of cucumbers along your problem area for a
few minutes, the phytochemicals in the cucumber
cause the collagen in your skin to tighten,
firming up the outer layer and reducing the
visibility of cellulite. Works great on wrinkles
too!!!
6. Want to avoid a hangover or
terrible headache? Eat a few cucumber slices
before going to bed and wake up refreshed and
headache free. Cucumbers contain enough sugar, B
vitamins and electrolytes to replenish essential
nutrients the body lost, keeping everything in
equilibrium, avoiding both a hangover and
headache!!
7 Looking to fight off that afternoon or evening snacking binge?
Cucumbers have been used for centuries and often used by
European trappers, traders and explores for
quick meals to thwart off starvation.
8. Have an important meeting or job interview and
you realize that you don't have enough time to
polish your shoes? Rub a freshly cut cucumber
over the shoe, its chemicals will provide a
quick and durable shine that not only looks
great but also repels
water.
9. Out of WD 40 and need to fix a squeaky hinge? Take a
cucumber slice and rub it along the problematic
hinge, and voila, the squeak is gone!
10. Stressed out and don't have time for massage,
facial or visit to the spa? Cut up an entire
cucumber and place it in a boiling pot of water,
the chemicals and nutrients from the cucumber
will react with the boiling water and be
released in the steam, creating a soothing,
relaxing aroma that has been shown to reduce
stress in new mothers and college students
during final exams.
11. Just finish a business lunch and realize you don't have gum or
mints? Take a slice of cucumber and press it to
the roof of your mouth with your tongue for 30
seconds to eliminate bad breath, the
phytochemcials will kill the bacteria in your
mouth responsible for causing bad
breath.
12. Looking for a'green'way to
clean your faucets, sinks or stainless steel?
Take a slice of cucumber and rub it on the
surface you want to clean, not only will it
remove years of tarnish and bring back the
shine, but is won't leave streaks and won't harm
you fingers or fingernails while you
clean.
13. Using a pen and made a mistake? Take the outside of the
cucumber and slowly use it to erase the pen
writing, also works great on crayons and markers
that the kids have used to decorate the
walls!!
Labels:
food,
health tips,
read must
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