ET OnlineNeeraj Chauhan, CEO, The Financial Mall, a wealth management firm based in Delhi.
Questions asked by his clients:
Where should we put our retirement corpus? Is investing in debt mutual funds safe, after the downgrades and defaults?
Are bank FDs safe after PMC and DHFL crisis?
His response to clients:
Many retired investors are worried about where to park their retirement corpus and where to invest in such an uncertain environment. Recently, some investors were concerned about the news around DHFL FDs being kept on hold and the PMC Bank crisis. So, the retirees are not sure whether their hard -earned money is safe in the bank FDs. Similarly, with a spree of downgrades and negative news surrounding debt mutual funds, retired investors are caught in a tough situation.
Here is what I tell these retirees:
Rule number 1: If you are not really really good at it, don't manage money on your own. It is a stage of life where your risk-taking ability is very low. So, don't take chances to save a small amount of profit.
Rule number 2: Don't put all your eggs in a single basket. The only way to steer through uncertainty is diversification.
Rule number 3: Debt mutual fund returns might be hit, but they didn't lose your capital. So, do not write them off.
Debt mutual funds are an important part of a retiree's portfolio. They have low risk. All debt mutual funds are not hit by defaults. There sure is some risk involved, but it is still a better investment option than other asset classes in terms of safety and downside protection.
Check the schemes you are investing, and their portfolios. Invest only the surplus amount after you have taken away money for your monthly needs. Don't invest the entire amount.
Senior Citizen Saving Schemes and Government of India Bonds are also good options for retirees.
Questions asked by his clients:
Where should we put our retirement corpus? Is investing in debt mutual funds safe, after the downgrades and defaults?
Are bank FDs safe after PMC and DHFL crisis?
His response to clients:
Many retired investors are worried about where to park their retirement corpus and where to invest in such an uncertain environment. Recently, some investors were concerned about the news around DHFL FDs being kept on hold and the PMC Bank crisis. So, the retirees are not sure whether their hard -earned money is safe in the bank FDs. Similarly, with a spree of downgrades and negative news surrounding debt mutual funds, retired investors are caught in a tough situation.
Here is what I tell these retirees:
Rule number 1: If you are not really really good at it, don't manage money on your own. It is a stage of life where your risk-taking ability is very low. So, don't take chances to save a small amount of profit.
Rule number 2: Don't put all your eggs in a single basket. The only way to steer through uncertainty is diversification.
Rule number 3: Debt mutual fund returns might be hit, but they didn't lose your capital. So, do not write them off.
Debt mutual funds are an important part of a retiree's portfolio. They have low risk. All debt mutual funds are not hit by defaults. There sure is some risk involved, but it is still a better investment option than other asset classes in terms of safety and downside protection.
Check the schemes you are investing, and their portfolios. Invest only the surplus amount after you have taken away money for your monthly needs. Don't invest the entire amount.
Senior Citizen Saving Schemes and Government of India Bonds are also good options for retirees.
( Originally published on Dec 02, 2019 )
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