Trimming direct exposure to equity and raising debt investment for regular income is one of the main pillars of a good asset mix.
Is your retirement round the corner? If so, planning your finances for the golden years would be on top of your agenda. What could be bothering you is how to allocate your money among various assets to generate a decent return maintain a healthy lifestyle.
Financial planners suggest that one need to be careful with risks as one approaches retirement or is retired. So, cutting down on direct exposure to equity and raising debt investment for regular income is one of the main pillars of a good asset mix.
“As a thumb rule, retirees should have an asset allocation which is based on their needs and not age,” says Amar Pandit, Founder & Chief Happyness Officer at HappynessFactory.in.
Pandit feels one should try and invest to generate regular income. “Even if one is over the age of 60, the person can have equity allocation because not all money will be required in the coming 1-5 years. One should invest the income required in the initial 5-6 years in fixed deposit/Arbitrage funds/debt funds, with the remaining amount being allocated to equity-oriented mutual funds. After every five years, reallocation of equity to debt can be done in order to generate income and rebalance one’s portfolio,” he said.
On equity, Pandit advocates investing through mutual funds. “Equity oriented mutual funds are preferable to direct stocks since the portfolio will be managed by of experts. In the long run, returns delivered by professionals tend to perform better than those of individually managed portfolios (which are more often than not, driven by news and tips),” he said.
S Sridharan, Head, Financial Planning, Wealthladder Investment Advisors, says investment should be spread across several asset types to meeting the fund requirements. “It is essential to identify the monthly cash flow required and for that one should have mixed asset of equity and debt to provide better portfolio level returns. The fixed income products that can be preferred are senior citizen savings scheme, fixed deposit and debt-based mutual funds. It is not advisable to invest all retirement corpus in one basket,” he said.According to Sridharan an ideal portfolio at the time of retirement should look something like this:
According to Sridharan an ideal portfolio at the time of retirement should look something like this:You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.