Listen to this article
A common concern among many salaried individuals is about how to secure life after retirement. This dream drives them to work hard throughout their careers to build a corpus that will support them during their retirement years. After retirement, the most challenging job is how to use the money they have saved.
Cafemutual spoke to a few MFDs to understand how they help their retired clients generate regular income and live a happy and secure post-retirement life.
Nasik MFD Ajay Kale of Guntavanuk Vikas Pratinidhi Sanstha (GPVS)
I first advise retired clients to put Rs.30 lakh in the senior citizen savings scheme. The client can generate a monthly income of Rs.20000 through this scheme which can help them take care of some basic needs.
Next, I recommend them to put the remaining amount in mutual funds across equity, debt and hybrid depending on their risk appetite.
Also, I recommend them setting up SWP of 6% of investment value to generate regular income. This allows their principal investment to grow with time.
Mumbai MFD Gajendra Kothari of Etica Wealth
While this concept is still not as popular in India, I believe that SWPs in 10 years will be on the same level of awareness as SIPs, even bigger.
In general, I find that SWPs are the one stop solution for retired investors. The flexibility even allows it to be good as a contingency option. I would advise MFDs to make sure their clients stay conservative initially and stay focused on stable withdrawal.
I generally recommend conservative hybrid funds and balanced advantage funds to create regular income for such clients.
Pune MFD Sandeep Bhushetty of Chatur Investments
Apart from creating a regular income, health concerns are a major issue for retirees. Hence, a portion of their funds should be invested in emergency reserves. I recommend liquid funds and debt funds, where the money can be easily accessed without a lock-in period, providing them with financial security for any unforeseen medical needs.
Mumbai Advisor Suraj Kaeley of the Sales Accelerator
It's important to understand that investors who have retired will have biases themselves and that should be taken under consideration.
Some may have portfolios skewed to equity, so a retirement mindset shift is needed here. Diversifying across all asset classes, such as real assets like gold and real estate along with financial assets like equity and debt goes a long way in reassuring an investor and creating stable income flows post retirement.
In my view, the starting point should be 25% in debt, 25% in equity, 15% in hybrids and the rest depends upon the individual's risk appetite.
Hybrid funds score over others due to taxation. As for an emergency plan, since you're investing 25% of your money in debt, that in itself can be used as a contingency plan. Also, a credit card is not a bad idea as it can be utilized in an emergency.
