The marriage ceremonies are done with, the honeymoon phase is over, and now ushers in a sense of responsibility of saving and investing together. Planning for retirement is a decision that must be taken jointly, which is why couples must take care to decide how and where to park their earnings. However, early investments can be low due to increased expenses on marital arrangements coupled with joint responsibilities.
The misconception is that couples cannot start investing money, which is why most of them refrain from putting money in various investment options or rather opt for safe havens to park their earnings. However, small investments as low as ₹5000 every month when continued for a prolonged period can help them create a decently sized corpus. The same investment if stepped up regularly over the investment tenure can help amass an amount big enough to pay for large-sized goals like buying a house, paying for vacation, or being able to afford expenses synonymous with the post-retirement phase of life.
Assuming that the couple invests ₹5000 every month in a mutual fund that earns somewhere 14-15 per cent over the next 30 years, the following illustration shows different mutual fund investments help earn myriad sums over the investment period.
Name of the Fund | 10-year returns (in %) | Invested Amount (in Rs) | Wealth Gain (in Rs) | Expected Amount (in Rs) |
Mirae Asset Large Cap Fund | 18.53 | 18,00,000 | 79665599 | 81465599 |
Kotak Bluechip Fund | 16.49 | 18,00,000 | 48028965 | 49828965 |
HDFC Mid-Cap Opportunities Fund | 23.87 | 18,00,000 | 305771872 | 307571872 |
SBI Magnum Midcap Fund | 23.62 | 18,00,000 | 286910594 | 288710594 |
Nippon India Small Cap Fund | 31.05 | 18,00,000 | 1953173036 | 1954973036 |
Franklin India Smaller Companies Fund | 24.53 | 18,00,000 | 361855309 | 363655309 |
Quant Absolute Fund | 20.14 | 18,00,000 | 119110584 | 120910584 |
ICICI Prudential Equity & Debt Fund | 18.68 | 18,00,000 | 82698132 | 84498132 |
| Source: Moneycontrol (As on September 13, 2023) | ||||
Now, imagine the size of the corpus only if the couple decides to step up the investment by 10 per cent every year. The novice may ignore the effect of this step up citing how this meagre rise in investment may not yield the desired gains. However, the compounding effect ensures that the couple earns from the interest gain on earnings made while the increased investment amount allows scope for added regular investments.
The couple may also choose between high-yield government schemes though the internal rate of return post-taxation may be lower than the inflation rate, thus, defeating the effect of the investment made. Alternatively, the couple may invest in various exchange-traded funds (ETFs), thus, allowing them to earn returns on a rise in prices while also ensuring them enough scope for liquidity.
Those inclined to stay invested for a tenure as long as eight years while benefiting from tax-free returns can also opt for sovereign gold bonds (SGBs) issued by the Reserve Bank of India (RBI) regularly. There are other investment options too though a lot depends on the couple’s knowledge of investment, investment horizon, risk appetite and financial goals.
