Retiring before you turn 50 is something that is achievable with focused effort, especially since the 50s are often your peak earning years. However, it is not an easy task and requires aggressive planning and discipline. If you are planning for early retirement, here are some instruments that you can rely on for a stable second innings.
1. Public Provident Fund (PPF)
PPF is considered one of the most trustworthy long-term investment options for conservative investors. Assured returns supported by the government, coupled with tax benefits, make it an excellent avenue for corpus growth in a steady manner. According to Vyom Chheda, Research Associate, StoxBox, the lock-in period encourages disciplined investing and is good for the accumulation of a sizeable nest egg over time, with compounded growth.
2. National Pension Scheme (NPS)
The NPS is a scheme that invests in equities, government bonds, and corporate debt, which is backed by government. This is beneficial for a person who requires balance of growth potential with stability and source of regular income upon retirement. "It is a very popular scheme as the scheme has comparatively low cost, tax benefits, and flexible capital deployment," Chheda said.
3. Senior Citizen Savings Scheme (SCSS)
Though it is only designed for people above 60 years of age, the SCSS is known as a type of instrument that is considered a retirement income strategy that gives out safe and attractive fixed payouts quarterly. Investors in the early stages of retirement can plan their asset transition to such schemes for predictable post-retirement income. Fixed Deposits and Post Office Monthly Income Scheme Bank fixed deposits and government-guaranteed Post Office Monthly Income Schemes are the best sources of secure, predictable income with minimal risk for conservative investors. These instruments earn interest income regularly, which can be much helpful in devising a regular cash flow needed for expenditure on living during retired life.
4. Equity Mutual Funds with Systematic Investment Plans (SIPs)
As stability matters, equity mutual funds through SIP give growth to outperform the market indices and inflation rate over a longer period of time. It is the most disciplined approach to get compounding benefits and diversification at the same time, and is very critical for early retirees who are aiming for corpus growth.
5. National Savings Certificate (NSC)
NSC is a government-backed fixed-income investment with a lock-in period of 5 years. It provides stable and guaranteed returns with tax benefits under Section 80C, making it a secure choice for building a retirement corpus. The interest is compounded annually but payable only at maturity, which encourages disciplined investing and helps grow a stable fund for your second innings.
