A retired person requires income generation, corpus protection, and corpus growth as well which can be possible with a well-built investment portfolio. There are various investment avenues to start investing for your retirement. And, you need to choose the most profitable and growth based avenues from them to have the best composition for a retirement investment portfolio to generate regular and higher returns.
Retirement investment planning should be done in a very specific way as you are going to depend on your investments for after-work life. Retired persons need not only to find out where to invest funds, but they also need to find out how to spread the money among different assets i.e. diversification which can be identified by their comfort and requirement.
Asset Allocation By Age
Different people start investing for retirement at different ages, and the same strategy can not be used at every stage. So, understand asset allocation by age.
At Career-Focused 30s, asset allocation should be:
Stocks: 70% – 80%
Bonds: 20% – 30%
In your 40s, when you are retirement-minded, asset allocation should be:
Stocks: 60% – 70%
Bonds: 30% – 40%
Almost retired in the 50s and 60s. Sample asset allocation should be:
Stocks: 50% – 60%
Bonds: 40% – 50%
Stocks here are suggested as a long-term investment, not the latest hot stocks for trading.
Retired and in your 70s, asset allocation should be:
Stocks: 30% – 50%
Bonds: 50% – 70%
It is the time to shift your focus from growth to income like dividend income.
Superior Payouts With Minimal Risk
Here are some of the best investment avenues for diversified investment portfolios that are known for superior payouts with minimal risk.
1. Preferred Stock
The preferred stock trades like a stock but acts like a bond in various aspects. They are preferred offerings where you will earn dividends monthly or quarterly. Dividends are qualified for capital gains in some cases. There is very little liquidity risk. You can invest in cumulative preferred stocks, participating preferred or convertible preferred.
2. Utility Stock
Utility stocks remain stable in price, comparatively, and pay dividends. Stocks can be purchased through a Demat account with an online broker. Demat account opening charges will differ from broker to broker. Utility stocks are graded equally as bonds and preferred stocks by the rating agencies.
3. Fixed deposits
Fixed deposits are designed for conservative investors where they can save their corpus and earn accumulated interest at the maturity date. The principal and interest rates are fixed for a specific period chosen by an investor. If you do not want to invest a lump sum amount in an FD, you can invest in the Systematic Deposit Plan which allows you to invest in FD with small monthly installments starting at Rs. 5000 per month.
4. Bond funds
Bond funds are dynamic investments to diversify your portfolio and offer superior payouts. They are comparatively less risky than stocks or mutual funds. Consider it for generating stable income within your retirement portfolio.
How to open a Demat account
As you know, to hold investments like stocks, bonds, you need to open a Demat account. You should open your account with a registered Depository Participant i.e. broker with higher credit ratings so that you are free from any worry about the security of your investments.
You can open an online Demat account without any account opening charges. But yes you need to pay nominal Annual Maintenance Charges (AMC) to your broker for their services.
Documents required for opening a Demat account include PAN Card, Passport size photo, identity proof, residential proof, income proof in digital form so that you can upload it online. These are the mandatory documents required to open your Demat account.
After in-person verification, you will be provided with your Demat Account number and client ID. It’s just a matter of 15 minutes.