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Sep 08, 2012, 12.41 PM | Source: Moneycontrol.com

Post retirement investment avenues for financial planning

Once you have retired, you no longer have a steady source of income. Managing your finances after retirement is different – but it need not be difficult. Financial expert Raag Vamdatt discusses various post-retirement investment avenues which can help one to enjoy a healthy financial life even after retirement.

When you are working, you are used to a certain way of spending, saving and investing. But when you retire, a lot changes in your financial life - you no longer have a steady source of fixed income every month. Therefore, you also need to change the way you save once you are retired.

The characteristics of post-retirement investment avenues

Safe Returns: You don't want too much risk in your investments. You cannot afford to lose money, since there is no monthly salary to make up for that loss.

Regular Returns: Since you would be using the interest to take care of your day to day expenses, you would want your returns to be regular, and not sporadic.

Avenues of Investment

Considering the above requirements, here is a list of avenues you should consider for post-retirement investments.

Senior Citizens Savings Scheme (SCSS) - The SCSS is a government sponsored scheme, and is therefore absolutely safe. It offers a great rate of interest (9%) and the interest payout is once every 3 months. The maximum limit of investment in SCSS is Rs. 15 Lakhs.

Fixed Deposits (FDs) - FDs provide good returns which are also quite safe. You can choose a monthly interest payment option to get regular interest payments.

FDs also provide you adequate liquidity, since they can be broken in case of emergency needs.

Check our interest rates offered by various banks

If the FD is kept at a reputed bank, it is almost as safe as a government backed investment avenue. However, for 100% safety, you can consider investing in post office term deposits.

Post Office Monthly Income Scheme (PO MIS) - This is also a very safe investment avenue where you receive a good rate of interest (8%) on a monthly basis. On top of this, you also get a 5% bonus at the time of maturity, making the effective yield 8.9%.

National Savings Certificate (NSC) and Kisan Vikas Patra (KVP) - These are other safe avenues of investment. They pay interest only on maturity, though.

Investment in Equities / Stocks after Retirement - Most people do not invest in stocks after retirement, thinking that they are too risky. However, research has shown that stocks provide the best risk-adjusted returns over the long term.

Also, long term investment in equities beats inflation by a large margin. Therefore, some investment in stocks is essential post-retirement to prevent your portfolio from losing its value due to inflation. An optimal level of stocks in your post-retirement portfolio is 10-20%.

You should invest in equities using diversified equity mutual funds. Preferably, you should invest using a systematic investment plan (SIP).

Check out interest rates offered by various Small Savings instruments

Managing your finances after retirement is different - but it need not be difficult! If you follow the above mentioned advice, you can ensure that you would continue leading a healthy financial life even after retirement.


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  • Q

    i have been investing in the follwoing MF for the past one year should i contiune or switch to other funds. 1 Axis equity fund direct(g) 2 Axis gold fung direct (g) 3 Birla Sun Life Dynamic Bond Fund - Retail Plan dirct (g) 4HDFC Mid-Cap Opportunities Fund (G) 5 ICICI Prudential Dynamic Plan - Direct Plan (G) 6 ICICI Prudential Top 200 Fund (G) advice if i have to switch, all are for long term


    All the schemes look fine and you may continue. The amount that you invest in respective schemes is not known, so just make sure you have al...

  • Q

    i want to investment in 60 lacs invest in mutual fund and i accept 16 percentage return per year my goal after 10 years 2.80crs what is possible please true guide


    Equities over a long term are expected to give a return of 14-17%. Sensex has given a return of approx. 17% since inception i.e 1979-80 till...

  • Q

    Iwant to invest rs10l free of risk ! Shd i go for bank fd's or as the bank suggest " guaranteed income plan" ? Please guide .


    Yes bank returns are fixed....

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    My daughter 18 yrs. old is studying at IIT Madras for engineering. She is a tax payer in the 20% slab. I wish to get her a LIC policy at an early age. The agent recomends JEEVAN ANAND from LIC of India. Kindly advise the best options.


    Hello, Jeevan Anand is a with-profit plan by LIC which has an insurance component as well. It is always recommended not to mix insurance and...

  • Q

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    The scheme that you should invest into would depend upon your time horizon. If you can stay invested for long term ( 7 yrs + ) then you shou...

  • Q

    I am planning to invest a lumspum of Rs 10000 in Mutual Fund for 2 years horizon. Please suggest me some good funds which will provide me maximum returns. I am ready to bear the risk. Would appreciate your advises. Thanks


    For a period of 2 years, I would suggest that you invest in a dynamic bond fund. However, since you have mentioned that you wish to take ris...

  • Q

    Dear sir/madam i am Dhananjay Surve from mumbai .I have got placement through my engineering college and working sience last 2 months .Ia am 22 years old ,i s investing in sip is good for me .As iam looking for time period of 3 to 5 years from now for investment ,which will be the best fund and what other investment option will be best .i am looking for 2 to 2.5 k per month investment.


    Invest the entire amount in a balanced fund. Its a good way to get an understanding about mutual fund working and investments. Invest in Tat...

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