When it comes time to post-retirement period, many people are confused about how to invest their hard-earned money. In such circumstances, here is some experts advice on whether to invest in gold, mutual funds, post-office schemes or real estate among other options.
Many people prefer to invest in pension schemes to generate monthly income after their retirement. There are many options available for this – from mutual funds to monthly income plans and gold. However, investing in a second home is one of the best options. Experts suggest that it is better to buy a second home after retirement rather than investing in pension schemes.
“Apart from getting monthly rent, the property value will also increase over a period. When in doubt where to invest your retirement benefits and other savings, one should definitely their hard-earned money to purchase a second home. Investment in property will generate regular rental income. This would be more profitable than investments made on gold and mutual funds. Plan such that the rental income is almost twice as much as your pension. This will benefit retirees greatly,” say financial experts. As rental income will increase gradually, it will compensate for the rising prices over some time. In case of other retirement plans, the possibility of getting higher returns comes with higher risks and it is highly not advisable for retired people to take risks with investments at such age.
Buying a second home comes with additional tax benefits. Investment on second home gets tax benefits under Section 80C and Section 10 (10A) of the Income Tax Act. Other investments of retirees also come under these sections. However, apart from the 80C benefits of buying a house, the interest paid on the home loan is also tax deductible under Section 24. “A second home can be a very solid asset in old age. With rising inflation levels, rental income and property values also increase, making them very handy in an emergency. Although some retirement plans may offer a larger sum, a second home is still a strong asset. There is also the option to sell the home if necessary,” experts pointed out. It is advised to try to buy a second home at least 10 to 15 years before retirement. Thus, EMIs can be paid conveniently. Along with this, it is also good to take help from a professional financial planner.
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