retirement plan: how to structure your investment portfolio for retirement


Ashok is a 68-year-old retired business executive. He supports his wife but has no other obligation or commitment. His pension from the voluntary pension fund in which he had invested is sufficient to cover their living expenses. However, he is unsure of his financial ability to handle any situation that might suddenly require a large outlay on tickets. A few months ago, his wife needed surgery which cost her money in addition to insurance coverage. Ashok had to take out a loan at a high interest rate to meet this expense. He has investments in NSC, POMIS, Senior Citizen Savings Schemes, banks and FD companies. Some of them soon mature. However, Ashok plans to break some deposits and park the funds in his savings account so he won’t be caught out again. Are his concerns valid and what can he do to address them?

Ashok, like all retirees, must have a portfolio that allows him to effectively meet the two most important needs at this stage of his life: regular income and cash. His income needs are adequately supported by his pension. But his ability to meet the need for short-term emergency funds is compromised by the fact that his money is tied up in long-term investments that impose a penalty if withdrawn before maturity.

Ashok will have to reallocate part of his portfolio to lower maturity investments. This will allow him to withdraw funds in the short term with little or no penalty. Since he is at a stage in his life where he is not making money, it is important that existing resources are invested in a way that gives him the flexibility to buy them back and use them to meet his current needs. or new. Instead of breaking deposits which will incur a penalty, Ashok should wait a bit as some of them are due to expire soon anyway. In the meantime, he should review his portfolio and decide which investments he can buy back sooner if the need arises and at the lowest cost. For example, bank deposits may be easier and faster to withdraw than a postal system.

Investments such as short-term debt funds, mutual fund monthly income plans, and lower-duration bank FDs are products Ashok should consider reallocating some of his portfolio. They will better ensure the returns as well as the liquidity needs of its investments than the savings bank account.

Content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

Previous Accelerate Launches Accelerate NFT Fund LP, Canada's First Web3 Investment Vehicle
Next Special Investment Vehicle Sivota PLC to Take Majority Stake in Apester Software Platform