5 Investment Tools After Retirement

As you enter retired life, it’s important to continue investment planning. Your goal planning will involve accumulating savings to manage expenses and help you pursue your interests in retirement. Many people look at investments for retirement planning expecting high returns in the shortest time. However, in reality, high-return low-risk investment options are rare. Most often, risk and returns are directly proportional. Hence, during investment planning, it’s important to match your risk appetite with the risk of the investment product you select.

There are two broad types of investment options available to you – financial and non-financial assets. Financial assets can be further categorised into market-linked products such as mutual funds, and fixed-income products such as Public Provident Fund and bank fixed deposits. Non-financial assets may include gold or real estate.

Here are some of the investment options that will help you achieve your personal finance goals as you enter retirement:

Direct equity investments

If you haven’t invested in direct equities before, you may be unsure as to which investments to make, when to enter and exit the market etc. If you have a long-term investment in mind, you could consider equity investments. They’re known to deliver higher returns as compared to other assets but also come with higher risk. To reduce downside risk, you can consider diversifying your portfolio across multiple sectors and markets.

Equity mutual funds

SEBI rules require equity mutual funds to invest at least 65% of their assets primarily in equities and equity related instruments. Equity MFs seek long term growth but could be volatile in the short term. These are suitable for investors with higher risk appetite and longer investment horizon. Equity funds can be either active or passive. They are further categorised based on the market-capitalisation or the sectors in which they’re invested. Within equity mutual funds, balanced funds and dynamic asset allocation funds are good options.

Debt mutual funds

For steady returns on investments, you could consider debt mutual funds, which are less risky and volatile than equity funds. The investments for these funds can be in corporate bonds, government securities, treasury bills etc. However, these are not completely risk-free. They still carry interest rate and credit risks.

National Pension System (NPS)

This is a long-term investment managed by the Pension Fund Regulatory and Development Authority (PFRDA). It includes a mix of equity, fixed deposits, corporate bonds, liquid and government funds. You can choose the instruments based on your risk appetite.

Public Provident Fund (PPF)

PPF has a long tenure of 15 years, which means you’ll be able to enjoy tax-free compounding interest. It’s also a comparatively safer investment with fixed rate of return.

When choosing investments for retirement planning, it’s best to go for a mix of different investment options to maintain a balance of risks, taxes, and returns. Consult a professional financial expert who will help make the most suitable choice for you.
¹https://www.amfiindia.com/investor-corner/knowledge-center/SEBI-categorization-of-mutual-fund-schemes.html

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