my mother is 78 and she has all her money in FD . please suggest some good mf and good returns.

Ans: It's great to see your proactive approach to financial planning. Given your situation, I will provide some tailored advice to help you secure your financial future while addressing your mother's needs.

Understanding Your Financial Landscape
You are approaching retirement in May 2024, after an extensive 42-year career in accounts. With a B. Com degree and a substantial professional background, you have a solid foundation. You've recently opted for the 'Pension on higher wages' scheme with EPFO, necessitating an arrears payment of Rs. 11 lakhs, and ensuring a monthly pension of Rs. 32,000.

Your current financial obligations include an LIC policy with an annual premium of Rs. 44,000 and a monthly salary of Rs. 1.1 lakh. Additionally, you have little to no savings, aside from your pension funds and FDs. With a moderate risk appetite and willingness to explore higher-risk options, your goal is to maintain financial stability and create long-term wealth.

Financial Stability Post-Retirement
Given your circumstances, maintaining financial stability is paramount. You have a homemaker wife, a young son, and dependent parents, all relying on your financial support. Here are some steps to consider:

Emergency Fund
Establish an emergency fund equivalent to at least six months of expenses. This fund will provide a safety net for unforeseen expenses or financial setbacks. Keep this fund in a liquid, low-risk investment like a high-interest savings account or a short-term debt fund.

Pension Planning
Your monthly pension of Rs. 32,000 will cover some of your post-retirement expenses. However, you should also consider other sources of income to supplement this amount. Given your current salary and expected pension, ensure your monthly expenses align with your retirement income.

Investment Strategy for Wealth Creation
With your moderate risk appetite, a well-diversified investment portfolio can help achieve long-term wealth creation. Here are some recommendations:

Systematic Investment Plan (SIP)
Starting a SIP of Rs. 60,000 per month for 8-10 years is a great step. Investing through SIPs allows you to benefit from rupee cost averaging and compound interest. Focus on a mix of equity and hybrid mutual funds, which provide growth potential and moderate risk.

Actively Managed Mutual Funds vs. Index Funds
While index funds track market indices, actively managed funds are handled by professional fund managers aiming to outperform the market. Here's why actively managed funds may be more beneficial:

Professional Expertise: Fund managers actively make investment decisions to maximize returns.
Potential for Higher Returns: Actively managed funds can outperform the market, especially in volatile times.
Risk Management: Fund managers adjust the portfolio to mitigate risks, which can be advantageous in fluctuating markets.
Regular Funds through Certified Financial Planners
Investing in regular funds through a certified financial planner (CFP) has its advantages over direct funds:

Professional Guidance: A CFP provides tailored advice and helps in selecting the best funds based on your financial goals.
Comprehensive Planning: CFPs offer holistic financial planning, considering various aspects of your financial health.
Periodic Reviews: Regular funds through a CFP include periodic portfolio reviews and rebalancing, ensuring alignment with your goals.
Addressing Your Mother’s Investments
Your 78-year-old mother currently has all her money in fixed deposits (FDs). While FDs offer safety, they may not provide sufficient returns to combat inflation. Here are some alternatives:

Conservative Hybrid Funds
These funds invest in a mix of debt and equity, offering better returns than FDs while maintaining lower risk. They provide capital appreciation and regular income, suitable for conservative investors like your mother.

Senior Citizen Savings Scheme (SCSS)
SCSS offers a secure investment option with regular income for senior citizens. It provides higher interest rates than FDs and comes with tax benefits under Section 80C of the Income Tax Act.

Monthly Income Plans (MIPs)
MIPs primarily invest in debt instruments and a small portion in equity, offering regular income with moderate risk. They are ideal for senior citizens seeking a balance between income and capital preservation.

Conclusion
Your commitment to securing a stable financial future is commendable. By creating an emergency fund, diversifying your investments, and planning for your retirement, you are on the right track. For your mother, shifting a portion of her investments to conservative hybrid funds, SCSS, or MIPs can enhance her returns while ensuring safety.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in