Retirement Planning With Capitalstars

We at Capitalstars follow an in-depth understanding of our client's financials, their needs, and requirements, and draw up a customized Retirement Plan.

Step 1: Understanding their risk profile

Clients are supposed to answer this questionnaire so that we understand their risk profile better and

On the basis of some assumptions, ideal asset allocation is defined.

Remember that, in the process of determining your retirement corpus, you have to make a few crucial assumptions such as the rate of inflation or rate of return on your investments. These factors are not fixed and are bound to fluctuate over time, thus impacting your calculation.

Besides, aspects such as your yearly savings and expenditure are also subject to fluctuations. With an increase in your salary, your saving and spending capacity also increases.

For this reason, you must regularly review your calculations to ensure that you are always on track to achieve your retirement corpus.

Step 2: Asses Their Existing Portfolio

Next is to list down and analyze their existing investments, savings, and cashflows.

We then assess the past performance of these investments and assess its portfolio concentration.

Step 3: Portfolio Recommendation and View

We provide our own view and recommendation to your portfolio.

Step 4: Calculating Insurance Needs

We further analyze your insurance needs. At Capitalstars, we always recommend that investors opt for a pure Term Insurance Plan and to keep insurance and investment needs separate.

To calculate how much your optimal life insurance should be, we follow the Human Life Value (HLV) approach. Try our HLV calculator here.

How to calculate HLV?

The first step towards the calculation of HLV would be to determine the person's net annual income after deducting the amount spent on personal items. This amount will be the amount that he affords for his family annually.

For example:

Mr. Sinha, aged 40 years, earns Rs 15,00,000 per annum and spends Rs 4,50,000 per annum on himself. Hence, he earns a net income of Rs 10,50,000 p.a. for his family. Therefore, as income replacement, his family would require Rs 10,50,000 p.a. for 1 year of living expenses.

Each year, with inflation, the family's expenses would proportionately increase, which must also be taken into account. The calculation will also include specific goal related expenditure.

Furthermore, assuming Mr. Sinha has a son and a daughter, both of whom would require Rs 10 lakhs for their education i.e. a total of Rs 20 lakhs. In Mr. Sinha's absence, this amount is still required such that the children's education does not suffer.

Hence this goal amount can be added to the financial value of Mr. Sinha's life.

Once the HLV has been calculated, the next step is to choose the appropriate insurance product to cover your needs.

There are a number of insurance products available in the market today – from term plans to ULIPs to endowment plans and so on. It is important to assess the available products and select the right insurance for your needs. At Capitalstars - we recommend opting for pure term plans.

Step 5: Retirement Plan

A retirement plan is thus created. We take into consideration all your needs, goals, current financial status, and depending upon your risk tolerance, we create a customized retirement

plan for you.

Before you start planning for your retirement, here are 10 questions you must seek answers for:

• When will I Retire?
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• How long will I live?
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• What is my monthly basic expenditure?
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• What will be the cost of my expenses in the future?
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• Do I have enough contingency corpus?
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• How much should I provide for my health care and medical needs?
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• Do I have adequate insurance cover?
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• What do I own?
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• Can I generate cash inflows during my retirement?
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• What do I desire to do during my retirement?

These questions can help you get started with. But if you seeking professional guidance, then do not hesitate to get in touch with Capitalstars.

Capitalstars is a SEBI registered investment advisor. 

Schedule a Call with Capitalstars investment consultant or drop a mail at backoffice@capiltalstars.in and we will get in touch with you. You may also call us on 9977499927.

We will be happy to help you plan your retirement. ☺

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* Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.