Where Do You Invest Money That Is Not In A Retirement Account When You Retire
Best Investments After Retirement
Common Indian mindset is that the regular pension or lump-sum amount withdrawn from various investments made earlier in life, will suffice to lead a comfortable and financially independent life post-retirement. But, its time you moved over this age-old concept and make better use of your retirement corpus. Investing your money in schemes which have short-tenure, beat effects of inflation, offer decent returns and liquidity, is the key to using your retirement corpus the best way possible.
Some Of The Best Investment Schemes After Retirement Are:
Invest In Balanced Mutual Funds:
A retirement portfolio should ideally consist of stocks, bonds and little cash. Balanced mutual funds invest in all these asset classes, therefore minimising the losses arising out of effects of inflation. Inflation can eat up the total returns earn from investments. At the same time, investing in balanced fund can provide the needed diversification to your investment portfolio. People with moderate risk appetite can try investing in balanced funds as these offer good return. On top of that, these funds enjoy tax-free returns if the holding period is more than a year.
Monthly Income Plans (MIP):
MIP is a type of debt mutual fund and are linked to the market. They decent returns and also tax benefits. But as with any market linked investment, investments in MIP also carry some amount of risk. When you invest money in an MIP, fund managers channel 15-20% of your money in equity and the remaining amount is invested into corporate bonds and government securities.
Senior Citizens Savings Scheme (SCSS):
It is a scheme offered by government for any person of age 60 years or above. But people between 55 and 60 can also opt for this scheme (provided they have retired on superannuation or under the Voluntary Retirement Scheme). The scheme offers an interest rate of 8.6% which is compounded quarterly.
Post Office Time Deposit (POTD):
Under POTD, investors deposit an amount for a certain period and on maturity they get that amount back with interest. The maximum term for POTD is 5 years. If you do not withdraw your funds at maturity, your deposit automatically gets renewed for the period selected originally. When your deposit gets auto renewed, the interest rate prevalent on the date of maturity is taken into consideration. The interest rates for POTD increase with an increase in tenure.
Post Office Monthly Income Scheme (POMIS):
Individuals can deposit a maximum of Rs 4,50,000 and Rs 9,00,000 for a joint account. A person can also open multiple accounts in various post offices, provided the total amount deposited in all the accounts do not exceed the maximum limit.
Conclusion:
Each one of us wants to lead a relaxed life after retirement. On top of a comfortable financial life post-retirement, arranging for a regular income source, would be cherry on the cake. Having a diversified investment portfolio would be the ideal financial strategy for people after retirement so that loss in any of the assets is discounted by profits in another set of assets in the portfolio.
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5 Stocks Recommendation For Feb 25th, 2019 – Mar 1st , 2019
1) Balkrishna Industries Ltd - Buy
| Stock | Balkrishna Industries Ltd | ||
| Recommendation | The stock has witnessed a breakout from its sideways consolidation backed by an uptick in volumes on the daily chart. It has also shown positive momentum on the daily MACD-Histogram, an indication that the uptrend will continue in the short term. | ||
| Buy/Sell | Range | Target | Stop Loss |
| Buy (Cash) | Rs850-855 | Rs892 | Rs827 |
| NSE Code | Market Cap (in Rs cr) | 52-week high/low | 200-Day EMA |
| BALKRISIND | 16543 | Rs1467/741 | Rs987 |
2) REC Ltd - Buy
| Stock | REC Ltd | ||
| Recommendation | The stock has witnessed a consolidation breakout backed by an uptick in volumes on the weekly chart. Derivative data indicates fresh long positions in the stock. | ||
| Buy/Sell | Range | Target | Stop Loss |
| Buy (Cash) | Rs131-133 | Rs139 | Rs127.8 |
| NSE Code | Market Cap (in Rs cr) | 52-week high/low | 200-Day EMA |
| RECLTD | 26068 | Rs148/89 | Rs119 |
3) Mahindra & Mahindra Ltd - Buy
| Stock | Mahindra & Mahindra Ltd | ||
| Recommendation | The stock has witnessed a rounding bottom formation and has managed to close above its 10-DEMA, short-term resistance level on the daily charts. It has also formed a bullish hammer candlestick on the weekly charts. | ||
| Buy/Sell | Range | Target | Stop Loss |
| Buy (Cash) | Rs641-647 | Rs672 | Rs625 |
| NSE Code | Market Cap (in Rs cr) | 52-week high/low | 200-Day EMA |
| M&M | 80272 | Rs992/615 | Rs771 |
4) Raymond Ltd - Buy
| Stock | Raymond Ltd | ||
| Recommendation | The stock has witnessed a breakout above its resistance levels backed by an uptick in volumes on the daily charts. It has also shown strong momentum on the daily MACD-Histogram. | ||
| Buy/Sell | Range | Target | Stop Loss |
| Buy (Cash) | Rs721-728 | Rs755 | Rs705 |
| NSE Code | Market Cap (in Rs cr) | 52-week high/low | 200-Day EMA |
| RAYMOND | 4478 | Rs1151/593 | Rs806 |
5) HDFC Bank Ltd - Sell
| Stock | HDFC Bank Ltd | ||
| Recommendation | The stock has formed a bearish engulfing candlestick pattern backed by an uptick in volumes on the daily chart. Derivative data indicates fresh short positions in the stock. | ||
| Buy/Sell | Range | Target | Stop Loss |
| Sell (March Futures) | Rs2105-2120 | Rs2030 | Rs2164 |
| NSE Code | Market Cap (in Rs cr) | 52-week high/low | 200-Day EMA |
| HDFCBANK | 569029 | Rs2219/1830 | Rs2041 |
Research Disclaimer
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What Stocks/Shares (Equity) Are And How Do Shareholders Make Money?
Jargon is the biggest hurdle to every new investor, particularly when it comes to those who want to invest in stocks. For that reason, it's important that before someone starts focusing on losses and gains, or the BSE versus the NSE, it's important to understand what stocks really are and what they represent. You can't make any money until you grasp the fundamentals of the tools you're working with, after all.
Put simply, stocks represent a share in a company. If someone goes online and buys a share of ONGC stock then that individual now has a stake in how well ONGC does. If the company does well, the investor does well. If the company does poorly, then the investor can lose money. How much one stands to gain or lose depends on how much stock that person has in the company, and how that particular company performs.
Let's use an example to make this a little bit clearer. Say that Company ABC wants to attract investors. As such it divides itself up into 5,00,000 shares of stock. For every person who buys stock, that money goes to the company so it can hire new employees, build new stores and generally attempt to get a bigger share of the market. Seen this way, it's clear that trading stock is great for the company. but how do you, the investor, make money?
Method 1: Make Money Trading Stocks
Trading stocks is the most well-known way to make money on the stock market. The price of a stock is liquid, climbing and falling within the space of days or even hours. The trick to make money as a trader is to buy the stock when its price is low, and to sell it when the price rises. So, say that a stock broker heard Reliance Industries is claiming a bigger part of the market and it's poised to rebound from a slump. He or she might buy stock at Rs.50 a share, and wait. If the stock goes up then the broker can sell it at a profit. So if the stock climbs to Rs.90 a share the broker has made a Rs. 40 per share profit. That's not terribly impressive for a single share, but if the broker purchased 100 shares, or 1,000 shares then that profit is going to go up pretty quickly.
It doesn't matter whether you hang onto a stock for an hour, a year or a decade; if you sell it for more than you paid for it you made a profit.
Method 2: Making Money With Stock Dividends
When someone is a stockholder in a company, that company's profits are also the stockholder's profits. The increasing value of a stock is just one instance of this. Another may be dividends paid to shareholders by the company. In plain English, that means that every quarter the company will take a segment of its profits, split it up and give those profits to stockholders according to how much stock someone has. The more profit the company makes, the more money the stockholder gets paid at the end of the quarter. The ideal situation for you to be in is to hold stock in a company that pays dividends, and which is making record profits. If you hold onto your shares then as long as the company is making money, you're making money. In essence you're being paid to own the stock, because when you bought it you paid for a share of the company. That share of the company comes with your own little piece of the profits pie.
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The ABC's of Investing
The money that you earn is partly spent and the rest is saved for a rainy day. Savings refer to the funds that are kept aside in safe custody, such as a savings account. Instead of keeping this money idle, you can invest your savings in various financial instruments which will pay you a hefty return in the near future.
The question that arises now ishow and where to invest this money. Potential investors can always take the help of afinancial advisorand an investment advisor, both of who are capable of providing detailed knowledge on the subject on investment andinvesting money. Investors can start investing after fulfilling the following simple steps:
- Obtaining documents relating to Personal Identification Proof and Address Proof.
- Approaching intermediaries like a broker, RM etc.
- Filling up the KYC form and furnishing the details required.
- Filling up of the broker-client agreement.
- Opening a DEMAT Account and linking it with a savings account.
As soon as these steps are completed, an investor can start investing in the financial market.
Theinvestment options can be well classified into 2 parts. They are:
- Physical assets: It comprises of tangible items like real estate, commodity, goldand silver in the form of jewelry and even antiques.
- Financial assets: It comprises of FDs with banks, small savings instruments with the post offices, provident fund, pension fund, money market instruments and capital market instruments.
The money market gives the scope ofshort term investment options.It deals with debt instruments such as bills of exchanges, commercial bills, treasury bills, certificate of deposits etc. These have relatively low risk and relatively low returns. However, they are one of the safest investment options, especially for those investors who want to play safe.
A capital market is an option forlong term investment. The various instruments of capital market are shares of companies (equity), mutual funds,SIP investment,derivatives market, IPOS, etc. These have a higher risk and higher returns in comparison to the instruments of the money market. Althoughstock investing is considered to be more rewarding, the high risk factor associated with it can result in loss if there is a downswing in the activities of a company.
Theinvestment strategiesof an individual depend on certain factors, such as:
- The risk taking appetite of investor
- The time horizon of investment
- Expected return
- Need for investment
Investments make our fund grow over a period of time whereas savings is just idle cash. Our short term needs can be fulfilled with the help of our savings but for the achievement of our long term financial goals, investment is a must. This is only possible withfinancial planning.
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The 'right' way to exit a losing trade
Every trader has his share of bad trades in his portfolio and you do not need all your stocks to be multi-baggers to be successful in the share market. While gains from a stock have no upper limit, the loss from a stock is limited to the value invested in it. Exiting a losing stock is not only a financial loss for a trader, but also an emotional or psychological loss. It is human tendency not to accept losses readily. We have a few recommendations that will help you exit a declining trade.
Let's take a look
Use stops to restrict your financial losses
Stops are calculated, pre-determined price levels at which the investor chooses to go short or sell his stocks to limit losses. When the stock price hits the stop loss price, a sell order is executed and the stock is automatically sold at that price. Stop loss orders work well as they define the losses beforehand and the loss amount is in the control of the investor. Have a personalized stop loss strategy and use it effectively to limit your losses while investing in stocks.
Keep a check on the stock even after exiting to find a re-entry point
Once you exit a position, keep an eye on it to identify any bullish indication of reversal, which can be a potential re-entry point. Using stops, you might sometimes exit your position because of price volatility. In no time, you may find the prices rising again. However, using proper stops is proven to be effective as it limits your losses in most cases. Analyze the charts, study the candlestick patterns, and re-enter, only, if it coincides with your research and not in hope or revenge. If there is no valid reason to re-enter the trade after the initial exit, walk away and search for new opportunities.
Do not emotionally connect with your stock picks
You should accept your wrong picks and move on rather than lingering onto the stock in the hope of a rebound. You need to monitor and notice the developments around your shares continuously, and if stocks are taking the wrong direction, you will sometimes need to book losses and accept your wrong stock picks. Don't fall in love with your shares, sell them if the fundamentals do not appear correct and restrict your losses. Booking losses or hedging them at an early stage can help minimize losses.
Accept responsibility and analyze your mistakes and find out where your investment plan can be improved
This will help reduce the chances of the same happening again. Handling trading losses well is a leading characteristic of successful investors. Treat a failure as an opportunity to learn and improve it in your next move. Many opportunities are waiting out there in the market for you to find and grab hold of.
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Do's and Don'ts of Stock Market Investing for Beginners
With a trading account and demat account you are ready to trade. But if you are a beginner in the stock markets, then that is not all. You also need to keep a tab on some major do's and don'ts before you venture into investing in the stock markets. Let us look at 10 such key dos and don'ts for investors.
10 important do's and don'ts for investment beginners
Do's are about doing the right things in the market when you are starting off on your investing journey while the don'ts are the ones to avoid. Here are ten such important dos and don'ts for investing beginners.
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Do your research before investing? Remember, research of a stock is not a rocket science and it is all about getting your research process right. Get comfortable reading the balance sheets and income statements of a company. Also read the Management Discussion and Analysis (MDA) of the stock you are planning to invest in.
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Start with your goals in mind. You must be clear about how much risk you are willing to take and how much risk you can afford to take. Your equity portfolio should be within the limits defined by your allocation. Always start with a plan.
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Don't put all your eggs in one basket. That is age old wisdom and applies to investing as well. In technical parlance it is called diversification where you effectively spread your equity investments across sectors and themes so that your investment performance is not dependent on any one stock or sector.
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Take a long term view and cultivate that habit in the very beginning. It is futile to time the market. Not only that it is hard to consistently get the tops and bottoms of the market right but it hardly makes any difference to your eventual returns.
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Try to invest consistently and regularly instead of putting a large corpus in a stock of your choice. The advantage of being regular is that it instils discipline in your investment and also gives the added benefit of rupee cost averaging. That means; over time your average cost of investing comes down.
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Even through equity is about the long term, try to get bargains. Even if you are convinced about the long term prospects of Infosys, it makes a lot of business sense to buy at Rs.650 than at Rs.750. Quite often, a market correction creates salivating bargains. Use such corrections to add quality stocks at low prices.
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Divide your equity portfolio between core holdings and satellite holdings. Your core holdings are your long term investment portfolio and you don't sell these stocks at every correction. On the other hand, the satellite portfolios are more of a trading portfolio where you look out for short to medium term opportunities in the market. Have a separate approach to both these types of stocks.
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Don't ignore trading costs. Even if you are a long term investor, take at a close look at your costs. Your cost is not just about brokerage costs but there are a number of other costs too. There are statutory costs, exchange charges, demat AMC, DIS charges, demat and remat charges etc. All these need to be added to calculate your effective cost. Nowadays, it makes a lot of sense to opt for low-cost discount brokers who can give the same execution at a much lower cost.
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As a beginner, remember that quality always wins in the end. When we talk about quality we are talking about quality at a number of levels. Look at quality of earnings; more of the earnings must be coming from the core business. Look at profitability; the company must be earning more margins than the peer group. Take stock of asset turnover; it tells you how efficiently the business is using assets. At a qualitative level, prefer companies that have high standard of disclosure and transparency. Large caps or mid caps, this quality approach always works in your favour.
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Make effective use of technology and if you are a beginner then you better get used to it early. Ideally use the online trading platform; it gives you a lot more control over your trades. Also, if possible you can download the app on your smart phone which allows you to trade on the run. Get used to reading electronic contract notes and ledgers; they are a lot more convenient and environment friendly than printed stuff.
In an effort to chase stocks, investors tend to forget that investment success is a lot more about discipline than about skills or flair. It is in your hands to make your investments work in a systematic manner.
Where Do You Invest Money That Is Not In A Retirement Account When You Retire
Source: https://www.5paisa.com/bengali/blog/best-investments-after-retirement
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