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Ramalingam Kalirajan |10876 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 11, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Santosh on Jul 22, 2025Hindi

I am 61, where to invest surplus money as liquidity is important

Ans: You have done well to build surplus at 61. Many people struggle at this stage. Your clarity that liquidity is important shows good awareness. At this age, safety and steady income must take priority. Growth is still useful but risk must be controlled. Let us look at a 360-degree plan for your surplus.

» Understanding your priorities

– Liquidity is top priority now.
– Safety of capital comes next.
– Regular income for daily needs is also important.
– Growth is useful but only with controlled risk.
– Avoid locking funds in long illiquid products.
– Flexibility is key for emergency needs at this stage.

» Role of mutual funds

– Mutual funds can serve well for your goals.
– For liquidity, short-term and liquid funds are useful.
– They allow redemption within 1–2 days.
– Returns are better than keeping money idle in savings account.
– For some growth, balanced funds with controlled equity can be considered.
– These give steady income potential and protect capital better than full equity.
– Avoid high small cap or mid cap exposure at this stage.
– Risk is not suited for post-retirement years.

» Concern with index funds

– Some investors consider index funds for liquidity.
– But index funds are passive and carry higher concentration risk.
– They do not adapt to market cycles.
– In falling markets, they give no protection.
– At your age, you need stability, not blind market following.
– Actively managed funds are more suitable as they adjust to risk.
– Hence avoid index funds even if expense looks low.

» Concern with direct funds

– Many think direct funds are cheaper.
– But you lose professional guidance with direct plans.
– Mistakes in fund selection can harm more than expense savings.
– At 61, risk of wrong decision is higher.
– Regular funds with CFP support give safety.
– You get expert asset allocation and timely review.
– This ensures liquidity and growth align with your needs.
– So prefer regular plans via Certified Financial Planner.

» Bank and deposit options

– Part of surplus can stay in bank fixed deposits.
– Choose short or medium term deposits for flexibility.
– Sweep-in fixed deposits give both interest and liquidity.
– Senior Citizen deposits sometimes offer extra interest.
– Do not put everything in long lock-in deposits.
– Maintain laddering approach with different maturities.

» Debt instruments for steady income

– Debt mutual funds are useful for safe growth.
– They are more tax efficient than fixed deposits.
– They provide liquidity in few days.
– Choose low to medium duration funds for stability.
– Avoid long duration funds as interest rate risk is high.
– Debt allocation can provide steady predictable income for expenses.

» Emergency fund creation

– Keep at least one year expenses in liquid mutual funds.
– This gives quick access when needed.
– Avoid using this for investments.
– This fund should be only for emergencies.
– This will protect you from sudden cash needs.

» Health and protection

– At 61, medical costs can be high.
– Keep separate reserve for medical expenses.
– Health insurance cover must be adequate.
– Surplus should also support medical emergencies not covered by insurance.
– Liquidity here is critical to avoid stress.

» Income generation plan

– Use systematic withdrawal from debt or balanced funds.
– This will give monthly income like pension.
– Tax treatment is better than FD interest.
– You can control withdrawal amount based on expense needs.
– This way surplus keeps working while giving liquidity.

» Tax considerations

– Equity fund LTCG above Rs 1.25 lakh taxed at 12.5%.
– STCG on equity taxed at 20%.
– Debt fund gains taxed as per your income slab.
– Bank FD interest fully taxable in slab.
– Proper mix of debt funds and balanced funds reduces tax outgo.
– Plan redemptions carefully to save tax.

» Psychological comfort

– At 61, peace of mind is as important as returns.
– Avoid high-risk products that cause worry.
– Liquidity ensures you feel secure.
– Balanced allocation gives comfort in both income and emergencies.
– A simple and clear portfolio reduces stress.

» Finally

– Keep one year expenses in liquid mutual funds as emergency reserve.
– Use debt mutual funds and short deposits for safe liquidity.
– Add balanced funds for moderate growth with safety.
– Avoid index funds, avoid direct funds, avoid risky small caps.
– Use regular funds through Certified Financial Planner for guidance.
– Maintain health and medical reserve.
– Create systematic withdrawal plan for regular income.
– With these steps, your surplus will remain safe, liquid and useful.
– You will enjoy peaceful retired life with steady income flow.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

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