Skip to main content

Investment strategies for senior citizens

Managing money is not only about returns. Basic concepts of investing need to be implemented to ensure liquidity too


   It's amazing as to how a retired professional who feels rich and wealthy immediately after retirement begins to worry about the erosion in cash flows after every decade. The feeling of what to do with money turns into what to do for money over a period of time. With life expectancy curve inching upwards over the years, there is a likelihood of many getting into this mood in the coming decades. Can one stop from feeling short of funds with planning or should one accept it as a fact of life?


   A friend recently commented that there would not be any retirement for him as he has been running his enterprise. Hence, he dismissed the idea of retirement planning at the outset and instead argued that he would manage money till his last breath. When I know very well how to manage money, why should I worry about products like pension plans.


   At 45, every individual is bound to believe that he has the smartness to manage money as has the energy and enthusiasm to understand different products, their risk profile etc. With age, the individual's ability to comprehend products begins to wane and this is one of the reasons why many senior citizens are comfortable with investment products like post office deposits, fixed deposits etc. Not only are they explicit with their returns but these products are also easy to manage. Only challenge comes when the investor is required to manage tax liability.


   While options for senior citizens have been discussed at regular intervals in these columns, one should also focus on other integral components of investing as they get older.


   Here are some factors that need to be kept in mind:

Keep record of all your investments    

Every investor should keep his family informed about his investments and it becomes a necessity in the case of senior citizens. A few months ago, a family sought help for the identification of fixed deposits as they had no clue about their parents' investment strategy. A few details were discovered because of the quarterly interest transfer into the bank account. In fact, the family had to wait for the maturity of the deposits as the deceased father had not left any clues about his investments. While secrecy with respect to investments is a necessity in some cases, it may not serve any purpose in the long run.

Avoid too many products    

A good fund manager is the one who keeps it simple and easy to manage. While diversification is a necessity for managing risk, avoid quantity in your portfolio. In fact, for senior citizens, options are limited and hence, diversification should be according to themes. For instance, if you are comfortable with a bank deposit, stick to one or two banks for parking money rather than spreading it over half-a-dozen accounts.

Nomination and joint account operations    

The needs of investors change over a period of time and hence investments too should keep pace with the changes. While nomination is a necessity as the pie (of investments) and age increase, it is not a bad idea to consider the option of joint ownership over a period of time. For instance, a fixed deposit or a mutual fund investment can be in joint ownership with the option of either or survivor. This will ensure easy access to funds in the event of emergency.


   While a professional fund manager will ensure these requirements, the challenge comes when money is handled independently by an investor without taking his family into confidence. Implementation of these strategies is a bigger necessity than managing returns as they ensure liquidity in times of need.

 

Popular posts from this blog

Real Returns in Investing

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Real Returns in Investing     A Anil Singh (name changed), 44, works with a private company and believes in investing his entire savings in fixed deposits. His financials from the year 2000 till date is given in the table. Anil's savings in FDs gave him an average return of around 8%. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 49.80 lakh. The value of his investment today is around Rs 66.71 lakh. Naveen Singh (name changed), 44, works in a similar profile like Anil. However his expenses were on the higher side. His financials are as in the table. Naveen invested only in equities. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 38.40 lakh. The v...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

ICICI Prudential MIP 25 - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential MIP 25     (CRISIL Rank 2)   This scheme was launched March 2004. Please see the chart below for the one, two, three and five years annualized returns from this scheme. The minimum investment in the scheme is Rs 5,000. The asset allocation of the portfolio is 24% equity, 72% debt and 4% cash equivalent and others. Please see the chart below for the monthly dividends declared by the scheme, on a per unit basis, over the last 5 years.   For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mai...

Franklin India Smaller Companies Fund - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Franklin India Smaller Companies Fund   While the universe of small-cap stocks in India is vast, there are very few equity funds which take on the task of sifting through this space for good long-term bets. Franklin India Smaller Companies Fund has managed this with aplomb. What we like about this fund is its significant out-performance of its category and benchmark over the last four years, and its ability to moderate portfolio risk despite investing in the riskiest segment of the equity market. This fund's stock selection strategy, like that of Franklin India Prima Fund is focused on finding companies that generate positive cash flows across business cycles. High return on investment and manageable leverage are also filtering criteria. Says R. Janakiraman, fund ma...

How to open a Capital Gains Account?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to open a Capital Gains Account? You can open a capital gains account in an authorized bank. The Government has notified 28 banks which can open the Capital Gains Account on behalf of the Government. You have to apply for opening the account by filling out the required application form (Form A) and submit proof of address, PAN card and photograph. You cannot withdraw funds from a capital gains account using a cheque book or ATM, like you do in your normal savings bank account. There are procedures to be followed to withdraw funds from the capital gains account. Investment in Specified Bonds Section 54EC of Income Act provide that if the seller invests whole or part of capital gains arising from the sale of asset in specified Capital Gains, within a period of six months of the ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now