How to build a retirement fund of nearly Rs 3 crore without taking any risk?

In the world of financial planning, the pursuit of a comfortable retirement often comes with its share of uncertainties and risks. However, a smart strategy and the right investment instruments can pave the way for a worry-free retirement fund. In this article, we will explore how to build a retirement corpus of nearly Rs 3 crore without taking any risks, all while benefiting from tax-free returns.

For many individuals, the prospect of retiring with a substantial nest egg is a dream they aspire to achieve. To turn this dream into reality, one must adopt a well-structured approach. In this case, we propose a strategy that combines prudent investments with tax-free and risk-free instruments.

Before delving into the specifics of these instruments, it's crucial to understand the role of asset allocation. While some portion of the investments should indeed be directed toward equities for the potential for higher returns, safeguarding a significant portion of the portfolio in tax-free and risk-free avenues is a wise move to reduce financial anxiety.

To embark on this journey, investors will need some critical components like employment and a commitment to invest Rs 5.5 lakh per annum for 21 years.

Three investment instruments stand out for offering the desired features – tax-free returns, minimal risk, and a secure lock-in period. Let's delve into each of them:

Public Provident Fund (PPF): This offers interest rate of 7.1 percent and has a lock-in period of 15 years.

Sukanya Samriddhi Yojana (SSY): This offers interest rate of 8 percent and has a lock-in period of 21 years.

Voluntary Provident Fund (VPF): This offers interest rate of 8.15 percent and has a lock-in period of 5 years.

With the right components in place, here's a breakdown of the strategy:

Invest Rs 5.5 lakh per annum for 21 years.

Opt for a combination of PPF, SSY, and VPF to leverage their tax-free and risk-free benefits.

Let the investments grow steadily over time.

Now, the million-dollar question – what can one expect at the end of this 21-year journey? A retirement fund of nearly Rs 3 crore awaits.

The power of compounding, coupled with the decent interest rates of these instruments, will help investors to accumulate a substantial corpus that is not only tax-free but also risk-free.

In an age of financial volatility, the quest for a secure and substantial retirement fund often seems like a daunting task. However, by following a disciplined investment strategy and capitalising on the tax-free and risk-free options like PPF, SSY, and VPF, investors can build a retirement fund that ensures financial tranquility in the golden years.