The second part of Moneylife Foundation’s event on retirement planning focussed on how use a mix of assets to generate retirement corpus and what are the options available post-retirement
Most savers put their savings in bank deposits, gold and real estate. A small portion of their assets may consist of equity shares, mutual funds, fixed income securities, etc. Would this kind of asset mix be sufficient to generate a sustainable income? In the second part of Moneylife Foundation’s two-part seminar on retirement planning, Debashis Basu, editor Moneylife, focused on how one can save efficiently and safely to meet one’s retirement needs. As much as creating a corpus is vital, sustaining it through the years post-retirement is equally crucial. Mr Basu explained to the members of Moneylife Foundation, what steps one could take to protect his/her corpus post-retirement, and the different options available in case of if there is a shortfall were also explained.
As explained in the first session, Mr Basu reiterated that “Retirement planning is very complicated because there are too many unknowns, many of which need to be assumed.” The significant and most important factor that would influence how much you are able to accumulate is where you invest. Out of the various factors that one can control and which one cannot, controlling how much you can save and where you invest can significantly influence your corpus. The least one should do, said Mr Basu, “is avoid the wrong products, save as much as possible, as early as possible and invest in products that create wealth.”
Through charts, Mr Basu explained to the audience how saving more and saving earlier could benefit one’s retirement corpus. How much returns different kinds of assets can generate were also explained to the audience. “The least you can do is invest in products that grow to beat inflation,” explained Mr Basu. For investing safely, one needs to understand the different products available and the risk and return associated.
An efficient mix of these assets can help create one’s nest egg. Lack of a well-planned savings plan can leave you with much less money to spend on yourself when you have no income. The basic purpose of investing for any goal and especially retirement is to be able to beat inflation. Stocks and equity funds over the long run of 5-10 years have more often than not beaten inflation. Other products like bank fixed deposits and other fixed income products may not deliver high returns but offer safety of capital.
The main factor that determines how you should go about saving for your retirement is your age. Mr Basu explained how over different age groups from 21 to 60 one can invest in a mix of products, taking into account the number of years to retirement. The younger you are the more time you have on your hand to generate long-term wealth. To use the power of compounding to the fullest one needs to invest in the right combination of products. The reason being, later on in life repayment of loans, expenses for child’s education, etc reduce you capacity to save. Therefore, the more you save early only benefits you in the long run.
“Post-retirement one’s main focus should be is to protect the corpus,” said Mr Basu. Here people have the option of immediate annuities, Senior Citizens Savings Scheme (SCSS) and MIP schemes, but none of these are great choices, explained Mr Basu. In the post-retirement period, it is important to choose safe assets, for which bank fixed deposits are the best. However, the main issue here is, one does not know the future returns and how long one would live. Investing in fixed income products for the very long term may turn out to be imprudent because they don’t beat inflation. Retirees may like to invest some amount of money in equity mutual funds.
Most savers have bulk of their investment in real estate. Mr Basu said, “Reverse mortgage is an option for them, but it has failed as a product in India and may pick up in near future.”
The session was followed by an engaging Q&A session. If you would like to be informed of many more such events in future become a Moneylife Foundation member. Click here to register.
The main reason for the decline in imports and trade deficit was dip in gold and silver imports, Director General of Foreign Trade (DGFT) Anup Pujari said
India's exports contracted by 4.6%, for the second consecutive month, to $23.79 billion in June 2013 compared to that in the year-ago period.
Imports too declined marginally by 0.37% to $36 billion in the month, leading to a trade deficit of $12.2 billion. In May, the trade gap stood at $20.1 billion.
The main reason for the decline in imports and trade deficit was dip in gold and silver imports, Director General of Foreign Trade (DGFT) Anup Pujari said.
Gold and silver imports in June decreased to $2.45 billion from $8.4 billion in May.
Cumulatively, exports during April-May too dipped by 1.41% to $72.45 billion. However, imports during the period were up by 5.99% to $122.6 billion.
“Decline in gold and silver imports could be attributed to the steps taken by the government and the RBI,” Pujari said.
Oil imports in June grew by 13.74% to $12.76 billion from $11.22 billion in the same period last year. On the other hand, non-oil imports declined by 6.7% to $23.2 billion.
The Nifty has to sustain itself above 5,925 to continue the upward momentum
The market settled higher on support from IT and technology stocks after Infosys’ quarterly results beat estimates. The Nifty has to sustain itself above 5,925 to continue the upward momentum. The National Stock Exchange (NSE) recorded a lower volume of 47.16 crore shares and advance-decline ratio of 613:725.
The Indian market opened higher as first quarter results from IT major Infosys beat estimates. However, markets in Asia were mixed in morning trade on cautiousness ahead of the release of China’s second quarter growth data on Monday. US markets closed with good gains on Thursday following Federal Reserve chairman Ben Bernanke’s reassurances that the central bank will continue a “highly accommodative policy” for some more time.
The Nifty opened trade at 6,001, up 66 points, and the Sensex jumped 223 to resume trade at 19,899. Gains in IT and technology sectors led the benchmarks higher as trade progressed.
IT major Infosys reported a 3.7% increase in consolidated net profit to Rs2,374 crore for the first quarter ended 30 June 2013. The Bangalore-based firm had reported a net profit of Rs2,289 crore in the year-ago period. Consolidated revenue for the reporting quarter was up 17.2% to Rs11,267 crore from Rs9,616 crore in the year-ago period.
However, profit booking saw the indices paring their initial gains and trading lower, albeit in the positive terrain. The market touched its lows shortly after 10.00am with the Nifty slipping to 5,951 and the Sensex falling to 19,786.
The market continued its sideways movement in the second half of the trading session on support from IT and technology stock but consumer durables, realty and auto sectors capped the gains.
The benchmarks resumed their northward journey in late trade on support from the IT sector on the back of a decent quarterly showing by Infosys. The benchmarks hit their highs toward the end of the trading session with the Nifty rising to 6,019 and the Sensex 19,992.
The market settled near the highs, closing in the positive for the second day in a row. The Nifty closed above the 6,000 level at 6,009, up 74 points (1.25%) and the Sensex ended the day at 19,958, a gain of 282 points (1.44%).
Among the broader indices, the BSE Mid-cap index ended flat and the BSE Small-cap index fell 0.19%.
The top sectoral gainers were BSE IT (up 6.46%); BSE TECk (up 5.13%); BSE Capital Goods (up 1.95%); BSE Healthcare (up 1.08%) and BSE Power (up 0.71%). The main losers were BSE Consumer Durables (up .96%); BSE Realty (down 0.58%); BSE PSU (down 0.40%); BSE Fast Moving Consumer Goods (down 0.21%) and BSE Auto (down 0.12%).
Out of the 30 stocks on the Sensex, 22 stocks settled higher. The main gainers were Infosys (up 10.92%); Wipro (up 3.34%); TCS (up 2.94%); Larsen & Toubro (up 2.72%) and Dr Reddy’s Laboratories (up 2.57%). The top losers were Maruti Suzuki (down 3.58%); ONGC (down 2.72%); Mahindra & Mahindra (down 1.38%); Hindalco Industries (down 1.12%) and ITC (down 0.95%).
The top two A Group gainers on the BSE were—Infosys (up 10.92%) and Tech Mahindra (up 5.19%).
The top two A Group losers on the BSE were—MMTC (down 5%) and Gitanjali Gems (down 4.99%).
The top two B Group gainers on the BSE were—Rajshree Sugars & Chemicals (up 20%) and Rishabdev Technoable (up 20%).
The top two B Group losers on the BSE were—Innovative Industries (down 19.92%) and Welspun Syntex (down 19.88%).
Of the 50 stocks on the Nifty, 31 ended in the in the green. The major gainers were Infosys (up 10.92%); IDFC (up 3.68%); L&T (up 3.39%); TCS (up 2.90%) and Reliance Industries (up 2.87%). The key losers were Jaiprakash Associates (down 3.23%); Maruti Suzuki (down 3.22%); ONGC (down 2.66%); UltraTech Cement Company (down 1.83%) and Grasim Industries (down 1.45%).
Markets in Asia closed mixed on nervousness ahead of the release of China’s GDP data for the second quarter of 2013 on Monday.
The Jakarta Composite advanced 0.63%; the KLSE Composite gained 0.25%; the Nikkei 225
rose 0.23% and the Taiwan Weighted settled 0.50% higher. Among the losers, the Shanghai Composite tanked 1.62%; the Hang Seng dropped 0.66%; the Straits Times fell 0.40% and the Seoul Composite was 0.41% lower.
At the time of writing, the CAC 40 of France was 0.33% higher, the DAX of Germany gained 0.99% and UK’s FTSE 100 rose by 0.54%. At the same time, the US stock futures were trading with marginal gains.
Back home, foreign institutional investors were net buyers of stocks totalling Rs638.26 crore on Thursday while domestic institutional investors were net sellers of shares amounting to Rs234.61 crore.
Dr Reddy’s Laboratories today announced that it has launched Decitabine for Injection (50mg), a therapeutic equivalent generic version of Dacogen (Decitabine for Injection) in the US market on Thursday. This follows approval by the United States Food & Drug Administration (USFDA) of Dr Reddy’s Abbreviated New Drug Application for Decitabine for Injection. The stock gained .45% to Rs2,352 on the NSE.
Continuing with its strategy of divesting non-core businesses, real estate player DLF has entered into a definitive business transfer agreement with Goyal MG Gases Pvt Ltd to transfer 11.2-MW capacity wind turbines located at Gadag, Karnataka on “as is where is basis” by way of slump sale for a lumpsum consideration of Rs29.52 crore. DLF fell 0.48% to close at Rs177.60 on the NSE.
Coromandel International, India’s leading fertiliser manufacturer has with its joint venture partners inaugurated a 1.4 million tonnes phosphoric acid plant in Tunisia on Friday. The stock rose 0.42% to Rs179 on the NSE.