Our 12th ‘Investor Story’  by :- Author: Mr. Rajendra Mhatre for Fund-matters

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How I planned my retirement?

This is a very personal question!

But ever since I retired a couple of years ago, numerous people have posed this question to me, including my colleagues in the bank. Now, when I have declared that I am an ex-banker, some readers may stop reading this further…

‘Bank people get fat pay packets.’ This is a generalized statement, rather, a misconception prevailing about the bankers in India!!!

But this is not the topic for discussion here and hence, I would sum up this issue with only one fact: Bankers get their pay revision once in five years @15% (approx.), that’s 3% per annum. Let’s discuss my financial planning!

Coming from a lower-middle-class family, money was a rare commodity for me. My first salary in the bank was ₹.428/-, about 45 years ago! In my college days, I used to get pocket money of ₹.25 every month. I would often save from that! Four hundred and twenty-eight rupees a month was a luxury for me. Young minds never think of tomorrow! Next 10 to 12 years, I saw to it that not a single penny from my salary carries to the next month! It was only after putting in 18 years in the bank, I was convinced about the necessity of savings and I opened my first savings account in the form of PPF!

This was my first step towards retirement planning! Ten years down the line, my balance in PPF was about ₹.4.60 lakhs. In another 10 years, at the time of retirement, I planned to increase it by another ₹.10 lakhs! I surpassed this target by ₹.10,000/-, so my planning worked perfectly! PPF is a ‘must have’ investment avenue for everyone who envisages better tomorrow, today itself! Its restrictive withdrawal policy and your firm determination to restrain from withdrawing help you build a bigger corpus.

Starting from the same year of PPF investing, I had also realized the need to save in the bank. Some also suggested me start investing in the share market. But, coming from an orthodox conservative family, somehow the idea of investing in ‘satta bazaar’ did not click on me. For a person like me, less remunerative but a certainly growing investment option was more acceptable! However, with increasing family responsibilities, I could manage to save only ₹.6 lakhs in the next 10 years.

It was in the year 2006, that I analyzed my present investments and forecasts for the next 11 years (till retirement) and I realized that, taking into account my yearly salary hikes, at this rate, I would have a corpus of merely ₹.30 lakhs. This was far below my expectations, particularly taking into consideration my liabilities towards my children, parents and of course, we two! I had planned to have a corpus of ₹.1 crore on the day of retirement, of which ₹.50 lakhs to come out of my savings and the remaining ₹.50 lakhs coming from retirement benefits from the bank in the form of PF, VPF, Gratuity and leave encashment.

The first thing I did immediately was to contribute an additional ₹.5,000 per month towards my Voluntary Provident Fund(VPF). This one move increased my corpus by more than ₹.10 lakhs over the next 11 years. I still needed a minimum of ₹.10 lakhs to complete my target of ₹.50 lakhs at the time of retirement. My search for a good investment option without carrying the risk of losing capital ended at Mutual Funds.

Somewhere in the first half of 2006, I came across a series of articles on mutual funds in the then newly started newspaper, DNA! For about a month, I went through all the write-ups and at the same time, followed certain funds, almost every day. I maintained a diary to note their ups and downs, shortlisted some, and then studied their performance throughout 3, 5, and 10 years. After about 2 months, I made my first MF investment in August 2006. Initially, there were some wrong decisions. I was following their progress every month. Faltering funds were disposed of, new funds were added, and by the year of retirement, I had a good corpus of about ₹.24 lakhs! The later part of my investing was mainly through SIPs.

Today, one such ‘first’ investment of ₹.20,000 in June 2008 is worth about ₹.1,30,000/-, an increase of 550 percent, and yearly appreciation of about 46 percent! In the last 11 years, I also got 3 promotions, and naturally a higher pay! I used almost all of my increased salary for investing, either in Bank FD’s or in MFs. And, at the time of retirement, my corpus was as under: 

My savings through MF, VPF, PPF, and FD –      51.55 lakhs 

Retirement benefits.-                                            50.03 lakhs   

TOTAL                                                                101.58 lakhs

I had not only achieved what I perceived but surpassed it! Long back, I had decided ‘not to engage in any activity to earn’ after retirement!

Today, I am engaged in all such activities which give me more than money – the satisfaction and joy of life!”

 About Author:  Mr. Rajendra Mhatre

‘Former Manager at a Nationalized Bank’