Investment for Senior Citizen

POSTED BY Learn Finance ON September 17, 2012 11:28 pm COMMENTS (9)

The father of one of my friend is a 77 year old pensioner. Recently- he received a lumpsum of 5 lakhs as arrears. Could you please advise an investment scheme for him. should he keep it in HDFC Liquid fund or HDFC MIP Long Term Plan and start a monthly SIP to some balanced MF?

9 replies on this article “Investment for Senior Citizen”

  1. Harsh Puri says:

    Learn Finance, I think you really need to sit down with your father and have a think about what you might need this money for. This is the first step in planning to invest in an instrument.

    Depending on when you need this money, this should either go into balanced funds or other partially market linked products, or more conservative fixed income instruments.

  2. BanyanFA says:

    If would suggest investing the complete amount in FDs with monthly / quarterly payout. Being a senior citizen he would be able to easily get around 9.5% plus for 10 years FD. This would mean around Rs. 4K per month for next 10 years. Any amount saved out of this can then be invested in a Balanced / MIP fund so that it can result in some form of capital generation at relatively very low level of risk. If he has no expenses, then even better – he can invest the entire into a Balanced / MIP fund via monthly SIP for next 10 years. It creates a good capital protection investment vehicle for him.

    Regards
    Banyan Financial Advisors (BFA)

  3. How can senior citizens participate in stock markets without having to worry about volatility and value erosion?

    1. Dear Pradeep, Without inviting risk of value erosion or volatility, investment in stock market is not possible. In case the person opts to invest in MIPs, practically the money is in debt mostly around 80-85% & only 15-20% is in Eq. So this can not be termed as Eq. investment.

      Regarding Balanced fund, as the Eq. allocation is more than 65% all the times (actually it remains between 70-75% most of the time), the inherent volatility & risk of stock market is there in a big way & any 3-4Y long down turn in the market may prove costly for the Sr. Citizen in the question.

      In my opinion, this Sr. Citizen should invest only that much amount, which he can afford to lose altogether in a worst case scenario.

      Thanks

      Ashal

  4. Learn Finance says:

    Hi

    The father of one of my friend is a 77 year old pensioner. Recently- he received a lumpsum of 5 lakhs as arrears. Could you please advise an investment scheme for him. should he keep it in HDFC Liquid fund or HDFC MIP Long Term Plan and start a monthly SIP to some balanced MF?

    Regards
    -Learn Finance

    1. Dear Learn Finance, the amount is meant for consumption or for long term wealth protection? The answer ‘ll vary depending upon the case.

      Thanks

      Ashal

      1. Learn Finance says:

        Dear Ashal,

        It is about long term wealth creation( as well as protection). He is a monthly pensioner and so wont need it for monthly expenses

        Regards
        -Learn Finance

        1. Dear Learn Finance, Keeping his age in mind – mytake ‘ll be 3L Rs. in HDFC MIP LTP & 2L Rs. in HDFC Prudence fund.

          Thanks

          Ashal

  5. Dear Learn Finance. what is the query?

    Thanks

    Ashal

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