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• Invest in companies with low debt
and good operating margins. 9"1,Ê
9-Ê
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• Invest in cash, do not leverage your
investments.
• Invest with long term horizons (3-5
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years).
• Invest in defensive sector (staples, ฀
telecom, healthcare, and utilities) till ฀ ฀ ฀ ฀
฀ ฀ ฀
bear market ends and eventually start
shifting the investments in cyclical
and financials stocks as we see signs
of recovery.

compared with averages of 6.6% and

6.0% in the preceding three and five
years, respectively. The most important
driver of this acceleration in growth
above potential was the sharp rise in
capital inflows over the past five years.
India received an average of US$10
billion per annum over 2000- 2002.
During 2003-2005, capital inflows
more than doubled, to an average of
US$21.3 billion, followed by increases
to US$38.5 billion in 2006 and to
US$98.3 billion in 2007
The Indian equity market will continue
to follow global developments in
2009 and also expected to follow the
global market trend. In 2008, market
participants have burnt their fingers
in the equity market because of the
global turmoil which has affected
R etirement brings to our minds
a whole range of thoughts–
for some of us; it is taking out
quality time for ourselves, while for
others it is time for interests that we
part of our financial planning exercise
till we are faced with the prospect of
actually retiring from our jobs or a bit
earlier. But by then, it’s too late!

many investors and the corporate in
a big way. Apart from global events,
domestic factors such as earnings
growth, GDP growth, inflation,
interest rate, IIP data and the general
elections are also important factors
which will affect the market in the
coming years. I believe bear market
rally to continue for another 12-15
months, which will keep Nifty in a
broad range (2600-3200) with flat to
negative biases. Market could even
break the October lows. Recovery of
bear market could be seen by upward
movement in the cyclical stocks.
couldn’t pursue during our working
days. However, what neither of us
desire is – days of compromised living
on account of lesser funds!
In the current scenario, we are aware
of the term “financial planning” and
we tend to plan for our long term
needs like marriage or our children’s
education. But have we ever spared
a thought for our own days after
retirement of who will take care of
expenses when our income runs dry?
We tend ignore the need to address this
For the many who still have a long
way to go before opting out of regular
work life, retirement relates to dreamy
clichés -- tending to the garden, walks
in the park, playing golf on weekdays,
playing with grandchildren, and so on.
We may view our current income as
adequate for a good lifestyle today, but
for the dreamy clichés to come alive,
we need to plan for funds when the
days of earning are over.
As years go by, our income will
increase but so will the cost of living.
If planning for a sustained fund flow

12| MARCH 2009 ADVISORS

post retirement is not done at the right
time, it may be difficult to sustain a
quality livelihood then. An early start
to saving for retirement ensures more
time to contribute to the kitty and for
the fund to grow in value. The longer
the delay in pension planning, the
higher will be the contributions to the
plan. Needless to say, those who are
faced with the prospect of imminent
retirement invariably have to worry
about serious issues like health care,
costs relating to daily commodities like
vegetables, groceries, etc. and allocate
larger portions of their saving towards
retirement funds.
Hence, much against the liking of
many who assume that retirement
planning after the age of 45 years
is sufficient time to save for non-
earning days, the actual need is quite
different. We need to understand that
retirement like all other long-term
needs in life requires a long-term plan.
If we can start planning for our child’s
future from the day he or she is born,
why do we not start planning for our
own retirement from the day we start
earning? Of course, such an early
investment would be an ideal situation
as it offers the investor the power of
compounding. When realization, of
the importance of planning on time
for retirement and doing it early, does
set in, we can then choose from a
range of retirement planning tools. It
is crucial that we take the advice of
a financial planner before choosing a
particular plan. Choosing a financial
planner to take care of the financial
needs will also ensure that we make
the right investment decisions.
Retirement or pension or
superannuation plans are an
arrangement to provide us with an
income when we no longer have a
steady income from employment. They
are usually in the form of guaranteed
annuity. Most of us would like to
believe that contribution to provident
funds (PF) - an option provided by
most companies - is sufficient to
sustain the current lifestyle needs even
after retirement. Most of us fail to
realize that the funds sowed through
PF, given macro-economic eroding
factors, is actually not sufficient in the
long run at all!
Specialised unit-linked plans (ULIPs)
addressing retirement needs are
an important component of any
retirement planning exercise. ULIPs
are structured to offer long-term
benefits. Ideally a ULIP is structured
to give results through a 10, 15, or even
a 30 year plan! It is an ideal solution
to guarantee comfortable living after
retirement, considering the long-term
nature of the need.
With such ULIPs, customers also
have a choice of allocating their funds
into equity, debt, balanced, or liquid
funds. The customer can decide asset
allocation depending on changing
age, tenure of investment, and risk
portfolio. It is hence imperative to exposure to equities to give back the
review plans at reasonable periodic required benefit.
intervals to ensure their relevance. In
the event of such a need to alter fund Pension funds are long-term
allocation, insurance companies offer investments that should ideally be
the switch facility in unit-linked plans, kept for around 20 years. This gives
wherein the customers can switch their the fund adequate time to offset losses
allocation, into debt or equity. Most arising out of short-term market falls.
plans offer four free switches a year. If Also, the fund value increases with the
planning long term, choose to invest in tenure of the contributions. Hence
equities at the beginning of the cycle the longer the term of the retirement
and rebalance your investments along ULIP, the better will be its benefits.
the way till maturity. If assets have In short, we plan for retirement to
been effectively allocated through ensure peace of mind. We can attain
the entire tenure of the policy, it will it if we have managed to invest wisely
provide maximum benefits at the end. and well in time to take care of our
retirement needs. It is important to
Several of us would know that for remember that retirement planning
the retirement kitty to show sure is not restricted to a mere number.
signs of health, investment in equity It is directly linked to larger and
is a must, despite short-term market unexpected needs that arise later in life.
volatilities. Research proves that If you wish to have a comfortable life
investments oriented for long-term then, then the time to start planning
wealth generation will need to have is NOW!
ADVISORS MARCH 2009 |13