Investing does not stop at retirement, only work life does. Therefore, while planning to build a corpus post retirement, one must keep in mind to diversify the components of one’s portfolio and also analyse the risks involved.

"I think the number one requirement for a retired person would be to protect the portfolio and to ensure that there is a capital protection and that value does not go down. On the other hand, try and make returns, because that’s the only bit of money that he has as he will not be able to add more to the portfolio.

So between these two extremes, you could have a situation where you could lose capital. On the other side, you could have a situation where you are trying to protect capital but you don’t get enough returns to even beat inflation,” said Lovaii Navlakhi, International Money Matters.

Below is the edited transcript of Navlakhi's interview with CNBC-TV18. Also watch the accompanying video.

Q: An investor wants to invest Rs 50,000 per month. He wants to know the best way for him to invest the money. He is a 73 year old retired person. His investment period is of two years. Wealth creation is the goal. He has some investments. The current ones in equity spread across many like an HDFC or Reliance. His total investment stands at Rs 12 lakh. What’s the advice that you would give him?

A: When a retired person is looking at investments, I think we need to break-up the components of their portfolio and see what are the risks involved. I think the number one requirement for a retired person would be to protect the portfolio and to ensure that there is a capital protection and that value does not go down.

On the other hand, try and make returns, because that’s the only bit of money that he has as he will not be able to add more to the portfolio. So between these two extremes, you could have a situation where you could lose capital. On the other side, you could have a situation where you are trying to protect capital but you don’t get enough returns to even beat inflation.

He has Rs 12 lakh all in equities, we don’t have any other details, so I would typically think that his investment should go into fixed income inorder to balance his portfolio a bit. After some time, when the market goes up he should reduce his equity exposure and start moving into some hybrid funds and then cut down his equity exposure essentially.

On the income side, typically short-term income side, he could look at some accrual products so that he gets some returns. He possibly can look at the ICICI Prudential Regular Savings, he can look at Reliance Regular Savings. There is multiple bunches of products available in that space.

Otherwise, he can look at liquid funds so that he has some bit kept as liquidity. I don’t really think at his age we need to look at insurance. But in case there is something maturing of an earlier policy then that is something that we need to plan for.

Q: Investor can invest Rs 7,000 per month. He is preparing for the house in the next 15 years. How should he allocate the money?

A: As he has mentioned he is 30 years old, recently married, so logically his time horizon is possibly longer. He is doing a very smart thing by investing in fixed deposits in his wife’s name. Possibly, she doesn’t have income otherwise. So her tax slab is much lower and fixed deposits earn interest, which is added to your income and tax. Since she is on a lower tax slab, maybe that’s a benefit. From his point of view, I think investing in equities from a long-term point of view is absolutely fine.

He has mentioned he wants to invest Rs 7,000 a month and he has a 15 year time horizon with a Rs 15 lakh target. If you actually calculate, he pretty much doesn’t require any return to meet that target, he just needs to put it safe and it should earn zero return and he will meet his target. But if he wants to earn something between 8-12% then I think maybe out of that Rs 7,000 he should put Rs 5,000 into equity funds. Look at HDFC Equity, DSP Equity Fund and put a couple of thousand rupees in a fixed income product so that to some extent there is a balance.

 I see he already has equity funds in his portfolio. He needs to be on top of the portfolio for sure whether directly or through his advisor so that some tactical moves are made at different points in time. If there is a very sharp upswing and he makes much higher returns than what he is anticipating, he should take out some of the profits and park it in safer instruments. If the reverse happens then he should be in a position to move his fixed income into equity.

I think the other important thing for him is to look at insurance. It is a very important factor to consider because typically when people are just married they tend to have very low insurance and think that we will add insurance later on when they have the capability. But a term insurance roughly equal to about 15-20 times his annual income is something I would strongly recommend he does.