Many new products for senior citizens are not backed by proper regulatory protection

Moneylife Foundation’s seminar on retirement planning held at Moneylife Knowledge Foundation was attended by a packed audience 

Moneylife Foundation today conducted a seminar on retirement planning titled "Plan your Moneylife Post Retirement with Safety, Security & Financial Independence". The session was conducted by Sucheta Dalal and Debashis Basu, Trustees of Moneylife Foundation.

Ms Dalal began by saying that there was a need to redefine seniority today-people between 60 and 80 are living longer, healthier and more active lives.  While this is good news, it also means that a person retiring at 60 has to plan for nearly 25 years of living on savings and interest income. This means the need to avoid a loss at any cost, then to invest safely, have adequate insurance for contingencies and to healthcare and safety issues.

From the financial perspective, Ms Dalal said that people must be careful not to fall for financial frauds that can deplete a chunk of their savings. She mentioned various kinds of internet-based fraud and identity theft that commonly ensnare people. She pointed to statutory provisions such as the "Maintenance and Welfare of Parents and Senior Citizens Act of 2007" which provides legal protection to senior citizens. For senior citizens who are asset-rich but cash-poor, there are options such as reverse mortgage, which allow them to encash the value of their homes, while continuing to live in them for the rest of their lives as well as that of their spouse.

She also talked about retirement communities and how they are great options for many senior citizen couples with a comfortable income.  Ms Dalal pointed out that many new products and services such as reverse mortgage or retirement communities have one weakness-inadequate regulatory protection.  She ended the session with a detailed discussion on wills, nominations and the issues involved in transmission of assets.
Mr Basu, who discussed investing for retirement, said that the decision is guided by the answer to three simple questions:
1. When do you retire?
2. How long can you let the money grow?
3. How much to invest and in what products?

The answer to this depends on the money needed at a specific time based on clear needs. For instance, if you need the money in less then three years, then fixed deposits or liquid funds are the obvious answer. If needed between three and five years or longer, it can be invested partly in fixed income instruments and partly in equity diversified mutual funds.
In an answer the question of how much savings is enough to retire? Mr Basu said about 80% of your expenses at the time of retirement must be covered. However, one US study had put it at 135% of expenses based on what savers would like to do as opposed to what they make do. He said that any estimate of a person's post retirement needs is based on a few difficult assumptions about longevity, lifestyle (which determine expenses), sources of income and the need to provide for heirs. He also told the audience that most people tend to ignore the impact of inflation, which steadily diminishes savings and increases expenses, since it always races ahead of any secure fixed income.

Conventional idea of a post-retirement plan is that one needs to be conservatively invested after 60 or 65. However, Mr Basu came up with the radical idea that if you are in good health, do not need the money and wish to leave your money to your heirs; you should stay invested in equity diversified mutual funds even at your ripe old age.


Mall supply in India falls 30% during 1st half of 2012 on deferment

The NCR saw highest mall supply deferment of over 80% while Bengaluru witnessed the highest mall supply of 1.5 msf during the first six months of 2012

New Delhi: The retail real estate market in India recorded a deferment of more than 30% of retail mall space against the projected supply in the first half (H1) of 2012, reports PTI quoting a a report by Cushman & Wakefield (C&W).

A fresh mall supply for H1 2012 stood at 2.27 million sq ft (msf). About 1 msf of expected mall supply was deferred to second half of the year or next year, the commercial real estate services firm said.

Jaideep Wahi, director, retail agency, C&W India said, "This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment. The current pace is, in fact, expected to help in maintaining a healthier supply to demand equation; especially for oversupplied micro-markets".

The overall vacancy rate for the major cities as of H1 2012 stood at 19.6%, marginally higher than the previous quarter.

National Capital Region (NCR) saw the highest mall supply deferment of over 80%, ensuring the city maintained vacancy levels at 28%. NCR saw only 120,000 sq ft of mall supply in Q1 and no supply in Q2 2012.

Bangalore witnessed the highest mall supply of 1.5 msf in H1 2012. The retail activity in the city continues to remain strong as the new mall supply became operational with 90% occupancy, whilst overall city level mall vacancy stood at 12.6%.

With high vacancy levels as well as cautious expansion plans of retailers, the deferment of supply is a necessary measure to bring stability in the retail market, he said.

According to C&W, rental values across most mall destinations within these cities remained largely stable, except for certain micromarkets in Bangalore, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2-13%.

Elgin Road in Kolkata recorded the highest growth in mall rents at 12.4% over last quarter mostly owing to renewals of existing tenants at a higher value.

In the same period, some prominent high streets across major cities recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high street properties, the report said.


HDFC Q1 net profit up 18.5% to Rs1,002 crore

In the June quarter, HDFC's loan book grew to Rs1.5 lakh crore, excluding the loans, worth Rs4,978 crore, sold to its sister concern HDFC Bank

Housing Development Finance Corporation (HDFC), the country's largest mortgage lender, on Wednesday reported 18.6% higher net profit during the first quarter of current fiscal, mainly on healthy growth in advances.

For the quarter to end-June, HDFC said its net profit rose to Rs1,002 crore from Rs844.5 crore, while total revenues, including net interest income, increased to Rs4,942.3 crore from Rs3,821.6 crore, in the same period last year.

During the first quarter, the mortgage lender said its loan book grew to Rs1.5 lakh crore from Rs1.2 lakh crore, excluding the loans, worth Rs4,978 crore, sold to its sister concern HDFC Bank.

HDFC's net interest income rose to Rs1,372.6 crore from Rs1,170.9 crore, while its income from operations increased to Rs4,914.7 crore from Rs3,800.7 crore, a year ago period.

"HDFC continues to grow its loan book faster than the industry growth rate in home loans which are slowing down due to the high interest rate environment and subdued economic outlook. Overall, it's earnings growth was largely in line with expectations, suggesting that spreads and asset quality too would have been more or less in line," said Vaibhav Agrawal, vice-president for research on banking at Angel Broking, in a note.

On Wednesday, HDFC closed marginally down at Rs678.3 on the BSE, while the benchmark Sensex also ended in the red at 17,489.


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