Retirement planning requires for strategic investments for the long term. It needs adequate knowledge of financial products, ability to foresee needs, andmore importantly, the ability to distinguish biases from facts in order to make a fool-proof savings plan for retirement.

People often start thinking about retirement in their middle age, but by then, they might have already lost a crucial time of their lives for investments, which could have enabled them to catch the compounding interest rates in the market and grow their retirement wealth.

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Because of a late start, their investments do not get sufficient time to grow. As a result, they will have to contend with an insufficient corpus for retirement. However, many other bad decisions or factors can work against your desired goals or influence the final result.

Some of these bad choices include the following:

Not Diversifying the Portfolio:

Earlier, many people were unfamiliar with the investment products and invested in instruments that worked for their parents, family members and friends. However, times have changed. With the evolving work culture and people’s ambitions, the products have also undergone a sea change. There are many products to choose from today, catering to different needs. These choices offer opportunities for diversification and reduce market risks. So, if you haven’t diversified your portfolio yet, this is the time. It will reduce risk and help the portfolio grow.

Ignoring Inflation:

Pradeep Suryavanshi, a research analyst and founder of Best mate Investment Services Pvt. Ltd, says, “Accounting for inflation in long-term investment planning is crucial because inflation erodes purchasing power over time. Investments need to outpace inflation to maintain and grow real value, ensuring future financial goals are met.”

For example, if one’s current expenses are Rs 50,000, it will be around Rs 89,500 after 10 years, assuming the inflation rate at 6 percent. Hence, random investments without factoring in inflation will lead to failure. It is one of the major factors that investors often overlook when planning for retirement and invest in instruments that offer guaranteed but low returns.

Indulgence And Social Pressure:

Some people spend money extravagantly on discretionary items, like a car or holidays or splurge on high-end restaurants—expenses that can be avoided unless it is absolutely necessary. It could be a personal indulgence or societal pressure, but it could be unhealthy for your finances for either reason. As these choices are subjective, it is vital to evaluate what’s important correctly, but these decisions should not come in the way of your retirement plan, or they should be factored in as part of the plan.

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Delaying Insurance Coverage:

Some people avoid visiting doctors and use home remedies for healthcare. There are also people who continue to still depend on their companies for health coverage and do not have a separate policy for themselves. Delaying health insurance coverage to save money can be a poor judgment on their part, given that healthcare inflation is at around 14 per cent and is expected to rise further. According to experts, Rs 15-20 lakh coverage is enough for most treatments in India.

Keeping Money Idle:

The money grows only when it is appropriately invested. Warren Buffet once famously said, “If you don’t find a way to make money while you sleep, you will work until you die.” If your money lies idle in a savings bank account, you are not making the best use of it—you are stopping it from realising its potential.

“A comprehensive plan entails a well-rounded investment strategy that includes a variety of asset classes, risk management, tax considerations, and periodic reviews. It aims to meet financial goals while adapting to changing market conditions and personal circumstances”, adds Suryavanshi. So, don’t leave your money idle if you want it to grow. Invest in appropriate instruments that can give you inflation-beating returns in the long run.