- Fixed income deposits issued by Banks.
- Bond funds issued by Government.
- Invest in bonds issued by corporate companies.
Let us take an “example of fixed income securities” to understand further:
Example of Fixed Deposit Income (FD):
Let us calculate the retirement and financial planning with few simple assumptions on Fix income deposits issued by Banks:
- You intend to invest Rs.1,30,000/- (approx. around $2,000) year on year in the fixed income scheme provided by your bank.
- Your net capital re-evaluated every year while include your initial capital per year + investment returns per year + Rs.1,30,000/- per year as a plan of systemic investment.
Going by these assumptions, here is how the cash balance will look like in 20 years as per Table.
| No. of Years | Fixed Deposit Per Year | Re-Investment Capital Per Year | 8% Return on Investment | Re-Investment Capital Valuation |
| 1 | 1,30,000 | 1,25,000 | 10,400 | 1,40,400 |
| 2 | 1,30,000 | 2,70,400 | 21,632 | 2,92,032 |
| 3 | 1,30,000 | 4,22,032 | 33,763 | 4,55,795 |
| 4 | 1,30,000 | 5,85,795 | 46,864 | 6,32,658 |
| 5 | 1,30,000 | 7,62,658 | 61,013 | 8,23,671 |
| 6 | 1,30,000 | 9,53,671 | 76,294 | 10,29,964 |
| 7 | 1,30,000 | 11,59,964 | 92,797 | 12,52,762 |
| 8 | 1,30,000 | 13,82,762 | 1,10,621 | 14,93,383 |
| 9 | 1,30,000 | 16,23,383 | 1,29,871 | 17,53,253 |
| 10 | 1,30,000 | 18,83,253 | 1,50,660 | 20,33,913 |
| 11 | 1,30,000 | 21,63,913 | 1,73,113 | 23,37,026 |
| 12 | 1,30,000 | 24,67,026 | 1,97,362 | 26,64,389 |
| 13 | 1,30,000 | 27,94,389 | 2,23,551 | 30,17,940 |
| 14 | 1,30,000 | 31,47,940 | 2,51,835 | 33,99,775 |
| 15 | 1,30,000 | 35,29,775 | 2,82,382 | 38,12,157 |
| 16 | 1,30,000 | 39,42,157 | 3,15,373 | 42,57,529 |
| 17 | 1,30,000 | 43,87,529 | 3,51,002 | 47,38,532 |
| 18 | 1,30,000 | 48,68,532 | 3,89,483 | 52,58,014 |
| 19 | 1,30,000 | 53,88,014 | 4,31,041 | 58,19,055 |
| 20 | 1,30,000 | 59,49,055 | 4,75,924 | 64,24,980 |
| Total Cash Balance in hand at the time of Retirement: | 64,24,980 |
Above calculation results are quite disgusting:
- After 20 years you have accumulated around Rs.64,24,980/- (approx. around $98,845).
- Considering your expenses is fixed after retirement and expenses will continue to grow at 8%. It’s an adequate amount for 3 years post retirement life. But after 3 year onwards you will be into hell situation if you haven’t plan anything else for the retirement.