I am a 50-year-old executive in a multinational company. Recently, my company paid its employees a lump sum in lieu of a pension. I got about Rs 25 lakh. How should I invest this amount to ensure it is good, risk-free capital after 10 years? Would a National Savings Certificate (NSC) for 10 years, followed by an immediate annuity plan, be a good idea?
There are multiple ways in which you could invest this money in low-risk instruments. Since you are working, you would be paying tax on your current income. Therefore, you should consider investing this amount in instruments that not only yield decent returns but are also tax-efficient. In case you are in the highest tax slab, you could consider investing in 'AAA' rated tax-free bonds of various public sector units, many of which are listed on stock exchanges. In case you are in a lower tax bracket and the post-tax returns on taxable fixed-income investments are higher, you could consider bank fixed deposits or 'AAA' rated taxable bonds, apart from NSC. Thereafter, you could consider buying an immediate annuity upon retirement.
I am a retired senior citizen. How should I invest a part of my retirement kitty in mutual funds? Which mutual funds would you advise me to invest in and approximately how much?
Knowing your age and other factors is important. You have not mentioned your age, your investible capital, the monthly income and expenses or whether you wish to invest your money in equity funds or debt funds. In case you are planning to invest in equity funds, please ensure you allocate a small portion, between five and 20 per cent of your overall retirement kitty, into these funds. For you, monthly income plans of mutual funds could be an ideal choice.
For these plans, the majority of the investment is in fixed-income instruments, while 15-20 per cent might be invested in equities. However, don't go by names alone, as monthly income is not guaranteed in these funds.
In case you want to invest purely in debt funds, you could allocate a much larger part of your retirement funds towards this.
However, you should select the debt funds carefully, depending on your investment capacity and the need for regular income, since some debt funds could be more volatile than others, owing to fluctuating bond yields.
If you have a long-term investment horizon in debt funds and can withstand some volatility, you could opt for longer-term debt funds. This could also be beneficial for you in case interest rates fall. However, in case you need to withdraw your money in the near term or don't want volatility, you should opt for short-term ,or floating-rate, debt funds.
There are multiple ways in which you could invest this money in low-risk instruments. Since you are working, you would be paying tax on your current income. Therefore, you should consider investing this amount in instruments that not only yield decent returns but are also tax-efficient. In case you are in the highest tax slab, you could consider investing in 'AAA' rated tax-free bonds of various public sector units, many of which are listed on stock exchanges. In case you are in a lower tax bracket and the post-tax returns on taxable fixed-income investments are higher, you could consider bank fixed deposits or 'AAA' rated taxable bonds, apart from NSC. Thereafter, you could consider buying an immediate annuity upon retirement.
I am a retired senior citizen. How should I invest a part of my retirement kitty in mutual funds? Which mutual funds would you advise me to invest in and approximately how much?
Knowing your age and other factors is important. You have not mentioned your age, your investible capital, the monthly income and expenses or whether you wish to invest your money in equity funds or debt funds. In case you are planning to invest in equity funds, please ensure you allocate a small portion, between five and 20 per cent of your overall retirement kitty, into these funds. For you, monthly income plans of mutual funds could be an ideal choice.
For these plans, the majority of the investment is in fixed-income instruments, while 15-20 per cent might be invested in equities. However, don't go by names alone, as monthly income is not guaranteed in these funds.
In case you want to invest purely in debt funds, you could allocate a much larger part of your retirement funds towards this.
However, you should select the debt funds carefully, depending on your investment capacity and the need for regular income, since some debt funds could be more volatile than others, owing to fluctuating bond yields.
If you have a long-term investment horizon in debt funds and can withstand some volatility, you could opt for longer-term debt funds. This could also be beneficial for you in case interest rates fall. However, in case you need to withdraw your money in the near term or don't want volatility, you should opt for short-term ,or floating-rate, debt funds.
The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in
Today, Rishi Nathany, CEO, Dalmia Securities, answers your queries