Hi. I have built a good corpus in equity mutual funds slowly & steadily. Now my retirement age is approaching, so I want to redeem these investments and put the money into safe schemes with target return of 7-8% p.a. Liquidity would be a bonus, although not mandatory. I can remain invested for 5-6 years.Please suggest.
Ans: As you approach retirement, it's prudent to prioritize capital preservation and steady returns. Here are some options to consider:
Debt Mutual Funds: Opt for debt mutual funds, such as short-term debt funds or corporate bond funds, which offer relatively stable returns with lower risk compared to equity funds. These funds invest in fixed-income securities and can provide returns in the range of 7-8% p.a.
Fixed Deposits (FDs): Consider investing in bank FDs or corporate FDs, which offer assured returns with capital protection. While FD returns may be slightly lower than your target range, they provide liquidity and stability, making them suitable for short to medium-term investment horizons.
Government Bonds: Invest in government bonds or securities like RBI Bonds or Sovereign Gold Bonds, which offer fixed returns and are considered relatively safe investments. These instruments typically offer returns in the range of 7-8% p.a. and provide liquidity through secondary market trading.
Post Office Monthly Income Scheme (POMIS): POMIS is a government-backed savings scheme that offers fixed monthly income with a target return of around 7-8% p.a. It provides capital protection and regular income, making it suitable for retirees.
Senior Citizen Savings Scheme (SCSS): SCSS is a government-backed savings scheme specifically designed for senior citizens, offering attractive returns and capital protection. It provides quarterly payouts and can be a suitable option for retirement income planning.
Systematic Withdrawal Plan (SWP): Consider setting up an SWP from your existing equity mutual funds to gradually redeem units and receive regular payouts. This allows you to maintain exposure to equities while generating a steady income stream.
Before making any investment decisions, consult with a Certified Financial Planner to assess your specific financial situation, risk tolerance, and retirement goals. They can help you design a customized investment strategy that aligns with your requirements and ensures a smooth transition into retirement.
