Must Read Before Investing

* If you get the conviction to invest Rs.1 lakh in a stock, then only invest in that stock, else forget that stock. Do not invest just for the sake of investing or to try your luck.

* Before buying any stock, write down the reasons why you are buying that stock and before selling review those points that you have noted down, then take a decision to sell.

* The trick of successful investors is to sell when they want to, not when they have to...

* One quick test is to imagine that you had to give a presentation on a stock that you want to buy to a room full of savvy industry veterans and then take their questions. If you could not do it, may be the purchase is not such a great idea.

Monday, December 12, 2011

7 golden rules for retirement

Courtesy -investmentsupergrowth -googlegroups.

*1 **Save 10% of your income for retirement *
If you have a regular job, the monthly contribution to your PF account is a good way to build a nest egg. For self-employed professionals and others not covered by the EPF umbrella, it is crucial to put away at least 10% of their income every month.

*2 **Increase investment as your income grows *
Not many people match their investments with the increase in income. This can undermine their retirement plan. Whenever you get a raise, allocate half of the additional income to savings. You won’t feel the difference since you will be enjoying the other half.

*3 * *Don’t dip into the corpus before retiring *
Withdrawing money from the corpus before you retire prevents your money to gain from the power of compounding. This can be disastrous in the long run.

*4 * *Withdraw 5% a year initially, then step up *
To ensure that you don’t run out of money, make a drawdown plan. Don’t withdraw more than 5% a year from the corpus in the first five years. This can be hiked to 10% by the time the retiree is 70.

*5 * *Save 20 times your annual expenses *
Knowing your post-retirement expenses is crucial. Add up all the expenses you are likely to incur after retirement and multiply this by 240 to know how much should be your retirement corpus.

*6 * *Borrow for kids’ studies, but save for **your retirement
*Before you save for your child’s education, make sure your retirement savings target has been met. Indian parents sometimes sacrifice more than they should. You can take an education loan to pay for college, but no bank will lend you for your retirement.

*7 * *100 - your age = allocation to stocks *
How much you have when you attend your last day at work will depend on how you divided your retirement savings between stocks, fixed income and other asset classes. Experts recommend that you should have an equity exposure of 100 minus your age. So, at 30, you should have about 70% of your portfolio in equities. At 55, the exposure to stocks should be down to 45%.
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1 comment:

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