The “Financially Independent-Retire Early” (FIRE) movement was supposed to be foolproof. Investors would work hard, save up, and live frugally, all with a plan to retire by forty. But in March 2020, due to the COVID-19 outbreak and the subsequent collapse of the market, things began to look bad for the global movement.
It’s not just the FIRE movement that was hit. The ongoing pandemic has forced millions of financially independent investors in India to recalibrate their portfolios. Those who were hoping to retire early are now scrambling to tweak their investments based on their updated goals and the economy’s renewed state.
Here’s a starter guide that takes a look at the current state of affairs in the Indian finance world and provides retirement guidance on how to invest safely in the post-pandemic world.
It’s a tricky question, but the answer is yes. If investors manage to tweak their portfolio to lessen the impact of the pandemic and take advantage of the bearish market, early retirement may be possible.
Although existing retirement deadlines may need to be adjusted, it is fairly possible if investors observe the market and update their portfolios regularly.
The idea is to balance out the portfolio in a way that can adapt to the current scenario, investing more in debt funds as compared to equity. Since the market conditions mainly affect equity funds, a portfolio balanced this way can take hits and still be able to give long-term benefits.
Another option can be changing the track altogether and investing more in equity right now. This is taking advantage of the situation and buying more equity when the rates are low, bound to go up in the past-pandemic world.
The pandemic has mostly affected large-cap funds, so investors need to reassess their investments and shuffle based on the current scenario and the forecast. Utilizing instruments such as mutual funds and government-run systems like Public Provident Fund (PPF) and the National Pension System (NPS) is also highly recommended.
It is always suggested to create a diversified portfolio. Even considering the ongoing pandemic, it remains true. Investors should balance out their equity-debt funds based on their current financial position.
It also suggests taking advantage of other instruments. Investing in mutual funds for the long term is one good option as investors can choose the right funds and build a portfolio via a systematic investment plan (SIP). The average rate of returns’ stability makes it one of the most considered instruments in the current situation. This way, one can focus both on debt and equity funds.
Retirement planning becomes easier if the short-term, long-term, and post-retirement plans are ready and fixed. With tools like the retirement calculator below you can measure the corpus and the frequency required to plan a hassle-free retirement. Or you can also contact your financial advisor to help you out.