Retirement savings require more than a ‘set it and forget it approach

How to make sure your retirement investment portfolio is on track

Vikrant Gupta, 45, works in the e-commerce industry, and plans to retire when he is 60. For the past decade, he has been saving Rs.20,000 per month for his retirement. While he believes he is on the right track for a comfortable retirement, should he reassess his savings strategy? Is his retirement portfolio aligned with his goals? How will a portfolio review help him?

A lot may have changed for Vikrant Gupta since he began saving for retirement a decade ago. His family may have grown, his standard of living could have risen with increased income, and his financial commitments, such as a home loan, children’s education, or car loan, may have risen. To ensure that his retirement fund aligns with his new lifestyle changes and financial obligations, he should reassess his target retirement corpus. By recalculating this amount, he can determine if his monthly savings need an upward adjustment from the current Rs.20,000.

Retirement savings require more than a ‘set it and forget it’ approach. Gupta should assess whether his portfolio is performing as needed to meet his retirement goals. By calculating his required rate of return based on his target corpus, he can determine if his current returns are sufficient. If not, he may need to adjust his portfolio mix to improve performance. Rebalancing his portfolio— shifting exposure between asset classes or investment options—could help ensure that he remains on track. He might consider booking partial profits or increasing exposure to high-performing investments, where appropriate.

Regularly monitoring his portfolio and retirement goals is crucial. It’s advisable for Gupta to review his investments at least once a year in order to confirm that his portfolio is performing well, remains properly structured, and that he is saving enough to reach his financial goals.

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

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This story originally appeared on: India Times - Author:Faqs of Insurances