Expert advice

Jun 11, 2013,15.35 IST

Retiring? Here's what you should invest in

In an interview to CNBC-TV18, Lovaii Navlakhi, MD & Chief Financial Planner at International Money Matters shared his reading and outlook on debt funds.

Below is the verbatim transcript of Navlakhi's interview with CNBC-TV18.

Q: The unanimous advice for those nearing retirement is to start moving equity investments into debt funds. Which are the better performing debt funds you can advice at this juncture?

A: Debt funds are fairly complicated and it would be nice if one contacts a financial advisor because different sets of debt funds have different implications. Debt funds would move based on currency, interest rate, demand supply and host of other factors that play into effect. Therefore, the best way to approach debt fund would be to segregate and create a ladder of investment that means have certain money which is maturing with an investment horizon for 12-15 months, certain for little longer and then for three-five years.

Also Read: Debt funds demystified! Know which fund suits you the best

I would recommend funds like Templeton India Short Term Income Plan for people with 12-15 month time horizon. If one is looking at 15-18 months then there is Birla Sun Life Short Term Opportunities Fund. If one is looking for bond opportunities for three-four years then look at ICICI Prudential Corporate Bond Fund. Therefore, these are three different types of funds with different tenures. The last one year returns have been between 10.5 percent to 11.5 percent and that would virtually be tax free because one will get an indexation benefit.

If one wants to take some risk, if one is a little experienced investor then consider some of the dynamic bond funds. If one wants to be in conservative dynamic bond fund then look at Birla Sun Life Dynamic Bond Fund or IDFC Super Saver Income Fund - Medium Term and for little more aggressive there is Reliance Dynamic Bond or IDFC Dynamic Bond Fund. Returns of these have also been in the range of 11-12 percent but if looked at returns as of two days ago then the aggressive dynamic bond funds have given almost 14 percent in the last one year. Therefore, one should know that there are these opportunities but at the same time approach it with caution because these funds could go down if interest rates went up in the market.

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