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If you work in a startup company and want to invest to secure your post-retirement future. If you are looking for an investment plan, then you can invest in PPF, NPS, pension plan or life insurance policy with guaranteed income for your investment. Apart from this, you can regularly invest in equity and mutual funds.
According to experts, for retirement you should invest in both PPF and NPS. On investing in PPF, you will get EEE tax benefit, that is, you can get tax exemption on investing. There will be no tax on both your interest and maturity amount. When you invest in NPS, you get a deduction under section 80CCD(2) of the Income Tax Act. This deduction is also available in the new tax regime. On retirement, you can either buy an annuity along with the maturity amount or withdraw a lump sum amount up to 60% of your NPS balance.
Apart from this, do not mix insurance and investment. You can buy a simple term life insurance cover, which will help your nominee in case something unfortunate happens to you. For investment purposes, you can invest in equity mutual funds including index funds, mid-cap and small-cap funds that provide exposure across categories with allocation based on your risk profile. You must buy these for your retirement.
Will have to invest so much every month
If you invest Rs 5,000 in HDFC Focused Fund, Rs 5,000 in ICICI Focused, Rs 5,000 in UTI Nifty 50 Index, Rs 2,000 in PGIM Mid Cap, Rs 2,000 in Axis Small Cap, Rs 2,000 in Quant Small Cap every month at the age of 25 Invest through SIP. Apart from this, there is Rs 1.5 lakh in NSC, Rs 1.5 lakh in EPF, Rs 50,000 in Nippon Money Market. If you maintain 70:30 asset allocation in equity and debt respectively, you can raise a hefty fund of up to Rs 10 crore on maturity.
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Reduce the number of funds in the portfolio
Try to reduce the number of funds in your portfolio with a combination of index funds, mid and small cap funds. UTI NIFTY 50 INDEX FUND, PGIM MIDCAP OPPO FUND, AXIS SMALL CAP, QUANT SMALL CAP FUND can become a part of your mutual fund portfolio. Multiple small cap funds are selected to diversify the risk and volatility associated with small caps. Your allocation breakup across large, mid and small cap funds is appropriate and you can stick with it. If you increase SIP every year, you can achieve the target of Rs 10 crore.
You can also follow 100 minus edge allocation for equity-debt asset allocation, which will adjust the risk profile. Depending on the financial goals you plan for, for example, buying a home, children’s education, etc., you can adjust the asset allocation to meet the respective goals.