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Ninad Ramdasi
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I am a retired person. Where should I invest to get regular income?

- Ranjit Shaluja

This is the most common question asked by many retirees. After retirement the risk-taking capacity of an individual reduces significantly. We would suggest investing in instruments which provide regular income and also have features of safety. During retirement you are totally dependent on your accumulated corpus, so that needs to be invested in the safest instrument. Following is a list of investment options retiree can invest in to get regular income with low risk.

Senior Citizen Savings Scheme (SCSS) offers the highest post-tax returns among all the fixed income taxable products. The tenure of this scheme is five years with minimum investment of Rs1,000 to maximum investment of Rs15 lakhs. A person who is of the age 60 years or above can invest in this scheme. The prevailing rate of SCSS is 7.4 per cent per annum (Q1 FY 2021-2022). Under this investment scheme you are eligible to receive tax benefit under Section 80 C.
Post Office Monthly Income Schemes (POMIS) offers 6.6 per cent per annum (FY 2021-2022). POMIS is safe and offers regular monthly income. Any individual can opt for POMIS. Minimum investment amount isRs1,500 and the maximum amount you can invest is Rs4.5 lakhs. POMIS does not provide any tax benefit and the interest is fully taxable. This scheme has lock-in timeframe of five years that does not allow withdrawal during this period.
As everyone knows, bank fixed deposits are safest and offer assured returns. The prevailing rate of return on fixed deposits ranges from 1.85 per cent to 6.95 per cent depending upon the tenure of investment. Interest on bank fixed deposits is fully taxable as per one’s Income Tax slab rates.
Pradhan Mantri Vaya Vandana Yojana is a low-risk investment pension plan operated by Life Insurance Corporation (LIC). Individuals of the age 60 or above are eligible to invest in this scheme. Pension receivable under this scheme ranges around Rs1,000 to Rs10,000. Interest rate currently offered by the scheme is 7.4 per cent (FY 2021-2022). This scheme is not eligible for tax deductions under Section 80 C.

These are some of the regular income schemes you can invest in. A retiree can invest in mutual funds, ETFs, tax-free bonds, etc. which can help you grow your portfolio. An ideal portfolio should consist of diversified types of investment i.e. regular income as well as growth. Before investing in these investment schemes it is necessary to go through the terms and conditions, eligibility and lock-in period of the particular investment scheme.

Should I wait for equity market correction to invest in equity funds?

- Jayant Mondal

No one can actually predict when the equity market will correct. It may do so in the next few weeks or it might not correct at all in the coming months. The equity market is very uncertain in nature and no one can actually forecast its rise and fall in the short term with high degree of probability. We come across people saying that this is not right time to invest in the market as it is very high and that it would be better to wait till it corrects. If you are waiting for the right time to invest then you will end up waiting forever. It is said that more money is lost in waiting for correction rather than waiting for actual correction.

You have to set a plan to invest with the right equity funds whose fundamentals are strong and suit your risk profile. When you are confused when to invest you should choose to invest through a systematic investment plan which will provide you the benefit of rupee cost averaging and you can start investing with a lower amount. If, as per your expectation, the equity market shows a huge correction, you can enhance your SIP amount or do a lump sum investment which will offer you great returns.

The advantage of this plan is that you are in the market and you won’t be waiting to invest in it anymore. When should you invest huge amounts in the market? This should be done when the market falls down as in 2020 due to the pandemic or in 2008 due to the market crash. If you had invested huge amounts in well-managed mutual fund schemes during these times, instead of panicking you would have seen your investment growing manifold. Hence, we would suggest you start investing through a systematic plan rather than waiting for the market to correct.


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