Tips To Protect Your Retirement Funds Post Inflation
Preparing for retirement is a financial task that deserves your undivided attention. Meeting your monetary needs is of primary importance, but you must also take all the necessary measures to ensure that your money gives you the best returns possible. To do this more efficiently, it is imperative that you factor in projected inflation, and work on your post-retirement finances accordingly.
Here are 5 Tips that will Help You Beat Inflation and Enjoy a Financially Comfortable Retirement.
1. Review Your Portfolio:
Investing your savings to finance your retirement needs constant supervision. Although you’re working towards a long-term goal, you must review your investment portfolio from time to time to make sure that your money is working as hard as it can. This involves keeping two things in mind.
First, you must see how volatility or inflation has the potential to affect your funds, and alter your portfolio accordingly. Secondly, even when you’re caught in a volatile market situation, you must view your investment objectively, with the end goal in sight.
When you invest for the short term, you need to constantly make modifications to ensure that your net financial outcome is greater than your investment corpus. But, when you invest for the long term, you have the option to weigh your decisions. While a balance between the two is key, remember that market conditions will change. And, making a series of rash decisions will cost you more than they will help you.
2. Shift To Stocks:
While parking your entire retirement fund in stocks is far from advisable, investing a part of your money in stocks is ideal. This will give you returns that help counter inflation. But, the important thing to keep in mind is picking the right stocks to invest in.
Pick stocks of companies that enjoy pricing power during inflation, as it leads to increase in the stock’s price.
For example, let’s assume that you pick a stock of a grain company. During inflation, the price of the company’s product rises, which leads to higher revenues for the company. Eventually, this results in a boost to the stock’s price. But, this doesn’t hold true for stocks of companies across industries.
3. Look at Ways In Which You Can Re-Invest:
It is essential that you make every financial decision with the view of beating inflation. You want to ensure that your money multiplies enough, so that it is not a worry, even if inflation is at an alarming figure. One way of doing this is to make good use of your employee provident fund (EPF) and public provident fund (PPF) money. Most of us take these PF instruments for granted. But, when the matured amount is invested correctly, you can use it to get income that acts as a hedge against inflation.
Instead of depositing the lump sum into your account, why not re-invest it in a non-cumulative fixed deposit? This way, not only will your money grow further, it will also give you timely payouts, thereby replacing a salary. A non-cumulative FD that can help you make good use of your provident fund’s maturity amount, is one offered by Bajaj Finance.
This Fixed Deposit offers high returns, and has an excellent stability rating. It offers payouts on a monthly, quarterly, semi-annual and annual basis. It also gives you flexibility with regards to the investment amount and tenor.
4. Consider Commercial Property
Typically, the value of commercial real estate keeps rising, even if the market isn’t performing well. So, along with investing in stocks, think about investing in commercial property. If lack of finances keeps you from an outright property purchase, you can invest in a mutual fund that invests in commercial real estate. This will balance out your investment portfolio and act as protection against ever-increasing inflation.
5. Study and Research Financial Matters:
Instead of following what your peers are doing or what your financial consultant advises to you, make sure you read up on the outcomes of your decision before making one. Also, before you commit to a financial plan, make sure you factor in all the possible outcomes, assess how much risk you can take and only then move forward.
Even when you decide on a course of action, do your research to ensure that you’re taking the necessary measures to ensure a positive result. For example, investing in stocks with the view of beating inflation is not enough.
Suppose you pick a retail stock, for instance. It will not be as beneficial as the grain stock. This is because the former is an industry that people tend to neglect during times of inflation. As a result, it isn’t the best place to park your money. Doing adequate research will help you familiarise yourself with these investment nuances.
These 5 tips will help you keep inflation at bay, and ensure that your retirement is planned for.