It is customary for personal finance advisers to harp on an early start. Let us say you are a little late bloomer and you started late. Or you are about to start, do not kill yourself with guilt. Maybe you have/had parents to support. Maybe you spent your money on your siblings. Maybe …there could be many reasons why you could not save. Let us see what can be done to rectify the situation:

Retire later: Working for a longer period like say till age 70 is a good option. However this may not be possible for everybody and your company may not keep you for a longer period of time. However if you are now say 55 try joining a company which is more liberal towards older people. So if you were to take up this new job at 55 and can continue till you are say 68 you have extended your working life by about 8 years.

Take care of your health: As you get older one big expense could be your medical bill. As long as you focus on your fitness, the best thing is a feel good factor and a dramatic cut in medical expenses. So this has to be your #1 priority.

Take some risk: If you are say 45 years of age and are investing for 80C benefit make sure that you use up the whole amount by investing in an ELSS and not in a bank fixed deposit or assets of that nature. You have to increase your equity exposure to about 50% of your liquid networth (ignore the one house in which you are staying). In a 25 year SIP in an equity fund (elss) the only risk is VOLATILITY, not a permanent erosion of your net worth.

Do not automatically reach for PPF: The Indian middle class love affair continues with PPF. However if you are 45 and above PPF maybe a good idea to avoid! When I say avoid I mean open a PPF account by all means but do not put too much amount into it. Just keep putting about Rs. 2000 a year (open the account with say Icici Bank, and operate it online – makes frequent transactions possible). Any bank that allows you E operations of your PPF account is fine was just giving an example of ICICI bank.

Rate of return will NOT MATTER: well not exactly what I meant! For the power of compounding to be really effective ‘n’ the time factor has to be high. When the investing horizon is shorter, you need to depend more on your own contribution. So if you were an early starter investing smaller amounts is all right, but if you are a late starter lifting the corpus has to be higher contributions, you cannot rest on ‘r’ – the rate of return.

Be careful about the smaller things too: the cost of advice, the fund management fees, the alertness of asset allocation – all these may sound small and trivial, but everything matters.

Be ready for smaller jobs: a senior accountant recently took up the accounting job of a doctor – at a small monthly remuneration. Be ready for such ego crushing status changes in your career. You need to keep busy and earn some money – it hardly matters how. This man went from a full time job in a big company earning about Rs. 900,000 per annum to a post retirement job of about Rs. 15,000 per month but for about 12-14 hours a week.

Understand the Impact of taxation – especially why bond funds make sense.

..many more perhaps later?