Hi sir.
My age is 66 years, my question to you is where to invest Lic maturity amount of 50 lac which i will be getting in a month's time. I and my wife has the following investments
PPF 1CR. Still continuing
FD 60L
Senior citizen scheme 60L
JEEWAN Akshay 50L
Pist off.monthly scheme 18L
Mutual fund 5L
We are staying in our own house and has no financial liability as both my daughters are well settled and married.
I have rental income of 30 thosand PM
Will it be feasible for me to invest in mutual funds at this stage or go for FD'S etc.
Regards
Ans: Congratulations on your upcoming maturity amount from LIC. You have done an excellent job in building a diverse investment portfolio. With your current financial stability and no liabilities, you have the freedom to make informed investment decisions.
Understanding Your Financial Goals
At the age of 66, your primary financial goals might include capital preservation, regular income, and a bit of growth to combat inflation. It is essential to balance these goals while considering your risk tolerance.
Assessing Existing Investments
You have significant investments in safe instruments:
PPF: Rs 1 crore
FD: Rs 60 lakh
Senior Citizen Scheme: Rs 60 lakh
Jeevan Akshay: Rs 50 lakh
Post Office Monthly Scheme: Rs 18 lakh
Mutual Funds: Rs 5 lakh
You also have a rental income of Rs 30,000 per month. This stable income and diversified investments already provide a solid financial foundation.
Considering Mutual Funds for Growth
Investing in mutual funds can provide higher returns compared to traditional instruments like FDs. However, given your age, the focus should be on low to moderate-risk mutual funds. These funds can help in achieving better inflation-adjusted returns without taking excessive risks.
Benefits of Actively Managed Funds
Actively managed funds, overseen by professional fund managers, aim to outperform the market. These funds can offer better returns, especially during market fluctuations. With the guidance of a Certified Financial Planner (CFP), you can select funds that align with your risk profile and financial goals.
Drawbacks of Index Funds
Index funds, which passively track a market index, do not offer flexibility during market downturns. They lack the potential to outperform the market since they mirror the index performance. Actively managed funds provide an opportunity for better returns through strategic investment decisions.
Disadvantages of Direct Funds
Direct funds might appear cost-effective due to lower fees, but they do not offer professional advice. Investing through a Mutual Fund Distributor (MFD) with a CFP credential provides expert guidance. This ensures that your investments are managed according to your financial needs and risk tolerance.
Considering Fixed Deposits for Stability
Fixed deposits (FDs) offer capital safety and guaranteed returns. They are suitable for risk-averse investors looking for steady income. Given your substantial existing FD investments, adding more could provide further financial security.
Exploring Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is an excellent option for senior citizens seeking regular income. It offers attractive interest rates and tax benefits. Given your current investment in SCSS, you are already benefiting from its stability and returns.
Evaluating Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is another secure option providing regular income. It ensures capital protection with a fixed monthly return. Your existing investment in POMIS complements your need for regular income.
Balancing Growth and Stability
Given your diversified portfolio, you might consider investing part of the LIC maturity amount in mutual funds for growth. Simultaneously, allocating a portion to FDs or SCSS can maintain stability and provide regular income. This balanced approach can help you achieve your financial goals effectively.
Conclusion
Your financial strategy should align with your goals, risk tolerance, and need for regular income. Consulting with a Certified Financial Planner (CFP) can provide tailored advice. They can help you make informed decisions and optimise your investment portfolio.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
