Page 22 - Seniorstoday July 2022 Issue
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returns/safe instruments should not be pa will halve your corpus in about 9 years.
more than your age and the rest can be This will stress out a typical retiree who is
in equities and MFs. If you are 30, invest unlikely to have a shield against persistent
30% of your funds in fixed returns/safe inflation.
instruments. 70% can be invested in risk
and high reward avenues like equities and Q – Are FDs in cooperative banks safe ?
MFS. If you are 65 years old, 65% of your They offer a better rate of interest than
investments should be in fixed return and other banks.
safe investments. A – Most of these banks are politically
controlled in the back stage or over
Q – Is an insurance policy necessary? geared and susceptible to wrong lending
A – Yes, it is, to provide for your family practices. As a result, many have gone bust
should you become disabled or exit and will go bust. E.g., Maharashtra State
suddenly. Don’t do the mistake of an Cooperative Bank, PMC Bank, etc. Do not
endowment policy since insurance is a bad get swayed by the marginally higher rate
investment. Take a term policy or a liability of interest, the safety of your capital is
insurance with a long maturity period. paramount and cannot be compromised.
As a guidance, the insurance cover can be Please move out of any FDs with any
equivalent to about 20 to 25 times your co-operative bank. There could be a
current annual earning. few exceptions like Shamrao Vithal and
Saraswat Bank, who are relatively more
Q – I would like to double my wealth professional and transparent in their
every 5 or 6 years. What should be the banking practices.
rate of return that I should look at?
A – As a rule, divide 72 by the returns % Q – What is an ideal corpus that one
and that will give you the number of years should aim to build as retirement
that it will take to double your investments. corpus?
Assume you are getting 8% return. Then A – Assuming a retirement age of 60,
it will take 9 years to double your money. medical advances and a reasonable health
Assume you are earning 12% return every profile, a person can hope to live for 20
year. Then, it will take 6 years to double to 30 years into retirement. Based on
your money. that, a corpus of, say 25 times the annual
Q – What is the impact of inflation on my
earnings?
A – In a scenario of inflation, your real rate
of interest earning will end up in negative
zone. For eg, if your average interest
earning is 6% and the inflation is 8%, you
real earning is -2%. Putting it differently,
you will have to draw from your corpus to
sustain your living. In the context of the
earlier question and answer, an 8% inflation
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