What may be the solution to be out of the clutches of 'inflation' ?

Dear Friends,

It is often forgotten that today we face a grave risk of out living our savings due to medical advancements and with knowledge about how to prolong life which though may not be very productive yet requires maintenance of high order. Therefore one of the big risk of all is shortfall risk.

In India too now people retiring at 60 face the serious prospect of spending two to three full decades in retirement.

That means investors using an overly conservative approach, investing in Gilt-edged securities, FDs and other money market instruments for earning safe interest, are often taking a big gamble with their portfolios and their retirement lifestyle needs than is generally realised. This is almost a sure thing to happen that you face the money crunch in late years when you consider that 'inflation' continuously eats into our savings worth.

What may be the solution to be out of the clutches of 'inflation' ? The solution in fact lies in building up your retirement provision through the use of 'Unit Linked Pension Plan' of a good reliable company which has past record of beating the benchmark indices on an ongoing basis and remain invested and keep contributing in the 'balanced fund' where there is about 50% equity flavour to be enjoyed. It is an established fact that no other investment beats the inflation as the equity portfolio in professional hands.

There is a further imperative that you have this plan early in age and contribute a sum of not less than 10% of your income or not less than 25% of your yearly savings, depending on what is the character of your income. If you still are without a 'Unit Linked Pension Plan' what ever your age at present please go for one immediately. The tax implications are benign under this plan hence your savings remain intact and are not eaten away by taxes. I have a further point to make and that is that you must compare fund management charge before choosing a company for this purpose. This charge applies to the whole corpus and year after year. I also have to tell you that 'HDFC SLIC' scores over the peers on both counts ie in respect of quality of fund management and the charges.

Please do give me an opportunity to explain any thing that remains unexplained to you by asking for it.

Hari Om

Krishna K Khandelwal