Every one wants to live a happy life, now and in future as well. In today’s world, to live happily one needs funds. Now as you are earning there is no need to worry as you have sufficient funds to fulfill all your requirements but what about future? Will you be having sufficient funds in future after retirement? A Normal man works for nearly 35years from the age of 25 to 60 and there is nearly 25yrs of long life after retirement which one has to pass without working,either living happily or depending on others.
Pension means planning for last 25yrs of life, when you will be old, you will not be able to work. There are various companies in life insurance market, with lots of pension plans, traditional pension plans and Unit linked Pension Plans(ULIPS).
ULIPs ( Unit linked Insurance Plans) pension plans are not at all suitable for retirement. Why? There is fixed age at which one has to retire i.e. 60. Now if you have invested in ULIPs for pension, there may be good growth( as we feel while investing in market linked products) in your funds over a period of time and if you are lucky then you will get good funds for retirement and hat can be used for spending last 25yrs of life but what if the market crashes just before 6 months of your retirement. Do you call it as a full proof plan for your retirement?( The above paragraph does not mean that you should not invest in market but it clearly says that your target age oriented investment should never go in market, as the targeted age is fixed after a fixed period of time but not the market).
Investment in Traditional Products is always better way of investment for target age oriented goals in life like Retirement. There is no doubt reasonable returns in conventional product but they are definite. Some people always argue that investment in traditional product will not help them to accumulate good funds at retirement. But these are those who did not plan their retirement at the right age. How?
Law of Compounding
The Above graph & data shows that if we invest small investment for a longer period of time the fund grows very fast so only need is to plan your pension early. If a person who is earning Rs 20,000 per month invest Rs 3000 per month in bank for next 30yrs then this amount becomes Rs 1 Cr(interest considered @9% p.a.) which is sufficient for a middle class person to spend his entire life happily. The early you start the lesser amount you need to save, the later you start, you need to save heavy amount.
