What is your advice regarding Mutual fund investment for one who is on 70+ and yearly income is eight lakhs?
Ans: It is wonderful that you are still thinking about investments at 70+. This shows your active mindset and your desire to keep your money working. Many people at this age prefer safety alone, but you are looking for balance — that is a strong sign of financial maturity.
With a yearly income of Rs 8 lakhs, you are in a steady position. Your focus now should be on protecting capital, earning steady income, and maintaining liquidity for medical and lifestyle needs. Let us review this in a complete and practical way.
» Understanding Your Financial Stage
At this age, your priority should not be high returns. It should be peace of mind and regular income. The investment plan must keep your money safe, yet beat inflation slightly.
Your goals now are:
Safety of capital.
Regular income for monthly expenses.
Easy access to money during emergencies.
Reasonable growth to handle inflation.
You no longer need to chase high-risk equity growth. Instead, you should focus on balanced stability.
» Key Principles for Mutual Fund Investing After 70
1. Focus on Safety and Income Generation
At this stage, it is important to choose mutual funds that are less volatile. The portfolio should be conservative — tilted more towards debt than equity.
A good structure can be:
Around 70–80% in debt mutual funds for stability and income.
Around 20–30% in equity mutual funds for long-term inflation protection.
This combination can help your money stay safe and still grow slightly better than fixed deposits.
2. Keep Liquidity High
Avoid locking your money in long-term closed-end funds or tax-saving funds. Liquidity matters more now. Always have at least one year’s expenses kept in liquid or short-term debt funds.
3. Invest Through Systematic Withdrawals (SWP)
If you depend on your investments for monthly income, use a Systematic Withdrawal Plan (SWP) from debt or balanced mutual funds.
This way, you can receive a steady monthly income like a pension while the remaining amount continues to grow.
4. Avoid Overexposure to Equity
Many people assume equity is risky — and yes, it can be if overused. A small 20–30% exposure in good actively managed equity funds helps protect your corpus from inflation without adding much risk.
Avoid index funds at this stage. They simply mirror the market and can fall sharply during downturns. Actively managed funds are better because fund managers handle risk and make adjustments when markets are volatile.
» Importance of Actively Managed Funds
Actively managed mutual funds are handled by professionals who make decisions depending on market conditions.
For a retired person, this is very important. It avoids emotional decision-making during volatility.
Index funds, on the other hand, blindly follow the index. When the market crashes, your value also drops equally. That can create anxiety and disturb peace of mind. Actively managed funds can balance risk better.
» Choosing the Right Debt Funds
Debt mutual funds come in many types. At your age, you must stay with safer categories. You can prefer short-duration or medium-duration funds that have high-quality government and corporate bonds.
Avoid credit risk funds or long-duration funds. These can fluctuate due to interest rate changes.
You can also keep a part in liquid or money market funds for short-term needs. These are very low-risk and help with instant redemption.
» Tax Perspective
Since your annual income is around Rs 8 lakh, you likely fall in the 10% or 20% tax slab, depending on deductions.
For mutual funds, the tax rules are as follows:
Equity Mutual Funds:
Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.
Short-term gains are taxed at 20%.
Debt Mutual Funds:
Gains (both short and long-term) are taxed as per your income tax slab.
Even after tax, mutual funds often give higher post-tax returns than bank FDs, with better liquidity and flexibility.
» Regular vs. Direct Mutual Funds
It is better to invest through regular plans under the guidance of a Certified Financial Planner (CFP).
Direct plans may appear cheaper, but they offer no professional monitoring. For senior citizens, expert help is important because:
You get ongoing review and rebalancing.
You receive advice on when to redeem and where to park funds.
You avoid panic decisions during market fluctuations.
The small difference in cost is worth the peace of mind and safety of your overall financial health.
» Role of a Certified Financial Planner
A Certified Financial Planner can help you structure your portfolio according to your needs:
How much income you require monthly.
How much to keep for emergencies.
How to minimise tax on withdrawals.
How to pass assets smoothly to your spouse or children later.
The planner can design an SWP plan that matches your lifestyle. For example, a monthly withdrawal for expenses and a small annual withdrawal for travel or gifts.
» Emergency and Medical Reserve
Keep at least one to two years’ worth of expenses in safe and instantly available funds like liquid mutual funds or bank deposits. This is your cushion for medical or sudden needs.
Also, ensure you have adequate health insurance coverage. Even if your family has PSU or corporate medical support, having your own health insurance helps during claim delays or exclusions.
» Avoid These Common Mistakes
Do not invest in risky thematic or small-cap funds.
Avoid unverified tips or stock market experiments.
Do not invest in index funds or ETFs — they are volatile and not actively managed.
Avoid locking funds in traditional insurance plans or annuities; they limit liquidity and yield low returns.
Do not invest lump-sum without guidance. Use systematic methods even for partial equity exposure.
» Example of Balanced Approach
You can follow a simple approach:
20% in equity mutual funds (actively managed).
70% in debt mutual funds (short-term or medium-term).
10% in liquid funds as emergency reserve.
From this mix, you can set up a monthly SWP for steady cash flow.
This approach provides peace, income stability, and low risk of capital loss. Your money remains accessible and continues to earn modest returns.
» How Much Can You Expect
Without going into calculations, a balanced portfolio can comfortably generate around 6–8% average return.
So, if you have Rs 50 lakh invested, you can withdraw Rs 25,000–30,000 monthly through an SWP, while the capital continues to grow slowly.
The key is to adjust the withdrawal rate as per inflation and market performance every 1–2 years.
» Family and Estate Planning
At this stage, also prepare a clear nomination and will for your investments.
Ensure your spouse or children know where investments are and how to access them.
A Certified Financial Planner can help you structure these steps without legal complications.
» Finally
You are in a beautiful stage of life where your focus should be comfort, not risk.
Your goal should be simple — steady income, safe growth, and complete peace of mind.
Keep your money flexible and safe.
Choose mostly debt funds, with a small equity portion for inflation protection.
Use SWP for monthly income.
Invest through a Certified Financial Planner for continued guidance.
Avoid index funds, direct plans, and risky products.
Keep a good medical and emergency buffer always ready.
With this approach, your savings will remain secure, your monthly needs will be met, and your capital will outlast your lifetime peacefully.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Triyadhish on Nov 14, 2022Hindi
