Retirement Planning: Why equity exposure is necessary even during your retirement period - expert decodes

Equity investment became imperative due to decreased interest rates of fixed deposits and increased life span, said Rajiv Shastri, Director & Chief Executive Officer - NJ Asset Management while speaking to Zee Business' Swati Raina in the popular TV show 'Money Guru'. As a result, the conventional wisdom of investment for Post-retirement is not applicable anymore.

He said that, though the equity exposure should come down during this period, it must remain at some level. He said that equities are instruments which have been able to beat inflation consistently over a period of time.

At some point in time, we all worry about retirement and how our regular expenses will be met when we are not working.

In such a situation, we need an investment which beats inflation and takes care of all our expenses and which also gives better post-tax returns.

For tension free pension, we have to adopt the right asset allocation strategy. For proper retirement planning, we can do 3 stage planning, which has different strategies for different ages. Such as accumulation for the age of 25 years, consolidation for the age of 45 years and distribution for the age of 60 years. 

Anil Chopra, Group Director - Financial Wellbeing at Bajaj Capital Limited, said that longevity is increasing, and people are trying to maintain their lifestyle even at the age of 70-90 after the age of retirement, i.e. 60. Equity investment offers a great opportunity for growth.

Chopra said that for long term wealth creation goals, people should invest in Mutual Funds SIP. He recommended stepping up the investment with an increment in salary.

Provident Fund, as it is tax-free and gives good returns. Thirdly, he recommended National Pension Scheme (NPS), which is tax-free and is a good option for planning pension for old age. NPS is good for self-employer, sportsperson etc. Fourthly he recommended investing in Gold ETF Funds too.

Additionally, Chopra recommended that investors should save at least 30 per cent of their Gross salary for their investment, and it is best to invest early at the age of 25.

Shastri said that equity has consistently managed to beat inflation across the world. Investors should allocate funds wisely in the equity to beat inflation.

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