When is the right time to start Saving?

Anytime. Yes. But the earlier you start the more the savings. Those who did not start saving at a early age, will vouch for it. They realize the strain. With some savings in hand, your mind is usually at peace, knowing that in case of problems you can fall back on your savings. This brings about happiness. Have you seen people around you grumpy and sad all the time, there are many such persons. Take a closer look, they don’t have any savings or their savings are would be low.

Why did this persons not start saving, there could be multiple reasons. When they were young and they started earning, they wanted to make the most of their money and started spending on needless pleasures and increased their consumptions. There were others who spent just because their friends were spending and they wanted to keep up with them.

So what happened, savings took a backseat, saying we are still young and we will save later. But as you grow, different pressures will keep coming up viz. Marriage, house, kids, their education, etc. This will never allow you to start your savings, so this is the time if you have not started, however small, bring in some discipline to start enjoying your life and getting happier.

Many persons just delay waiting for that time of the year, when they expect a bonus or for the markets to fall or for the price of gold to fall. There is no right time; every time is the right time. Start your savings, you might make some mistakes but you will learn and improve. There are many books and papers available to tell you where to put your savings, everyday.

So the earlier you start, the chances of you making money improve, since you have the time to learn from your mistakes. But if you start later and make a mistake, you will not have time to recover. Also if you keep saving small amounts over a period of time, the chances of losing money will reduce, than when you do it in one go. Saving over a period of time, helps in compound your savings.

It is best to start savings when your responsibilities are less, as we grow, our responsibilities will start increasing. Till now we were just saying saving, but what do you do to the saving, you invest. Proper investing will help your money grow and it would grow only if you invest properly. If you do not invest, Inflation will eat into your savings. What do I mean here?

Inflation means rising prices, so if you leave your savings as they are without investing, the saving will not be enough. This is another reason to invest and get a return higher than the rate of inflation. Another reason to save and invest is, you have only certain earning life, so the saving is more to take care of your retirement. Hence the earlier you start, the more comfortable your retirement.

Retirement is not the only goal in life; it is the long term goal. So the earlier you start, a smaller amount can be set aside for this goal. The best thing to do is make a list of all the goals you have to achieve and how are you going to fund them. List all short term, medium term as well as long term and start allocating your savings to each of these goals.

But before you start investing, there are some expenses which would come anytime which could eat away your savings, so first get a health insurance in place and pay off all your debts. Especially all non asset generating debts.

All the best. Start investing.

Investments through Mutual Funds

So you have done your calculations and arrived at a figure that you should invest regularly to achieve your goal. Now you have decided that some portion of your investment needs to be in equity. So which equity share would you start investing, so that you achieve your goal? It’s difficult, leave it to the professionals.

You have two choices, hire a portfolio manager or invest in a mutual fund scheme investing in equities. Now both the types of investments have its pros and cons. For investing using the services of a portfolio manager, you need to commit a big sum of money, also the upfront charges are high.

In a mutual fund, you can start with a very small amount and the charges are also less. So now that we have decided to invest in a mutual fund investing in equities. The next hurdle begins. Which fund should I choose, yes we said equity mutual fund, but do you know that there are hundreds of equity mutual funds.

So let us now narrow down our search. We should chose a fund whose cost is the lowest. The cheapest equity mutual fund is the index fund. It is cheapest because the manager tries to mimic the index and you do not have to worry about the stocks chosen by the fund manager, since he has to mimic the index.

If you look through the performance data, you will find that most of the index funds have actually beaten the index. So the next thing to do is select the fund which has done well over a period of time. It’s always better to go by performance that to go for new index fund. In a new index fund, you cannot be sure that the performance will be good.

So if you are new to investing, start with an index mutual fund with a good track record.

Loans – Deep down in Debt

We all like a good life style, but we do not have the money to match that life style. Many of our friends have a better life style than us, so to keep up with them ( we call it peer pressure) we take loans. So at the end of the day we end up with different loans viz. Home loan, Car loan, Personal Loan (to go on a holiday), etc.

As time passes, the pressure on our finances keeps mounting and you do not have more options to go directly to the bank. So to service these loans you go for an easier option. Your wallet, yes, the credit card in your wallet. The moment you start servicing your debt using the credit card option and you are in deep trouble.

Interest on credit cart dues is usually the highest. In case you reach such a stage, the best option is seek professional help. Don’t dig the pit deeper for yourself, the deeper the pit, more difficult for you to climb out. As your borrowing grows your credit score starts going down and it would become difficult for you to get loans.

Currently the interest rates are not linked to your credit score, but it would start soon and your interest rates would start rising if your debt starts increasing. Should you wait till you reach the stage of borrowing using your credit card or your try to assess the damage you have done earlier?

Earlier, then the thumb rule would be the moment your loan repayments goes beyond 50%, its time you had a relook at your loans. You have to start looking at repaying and getting out of debt. So which debts should you repay first? Those loans which do not help in building an asset should be the first to be repaid.

There would be cases where there are multiple, in such case repay the one with the highest interest. The task is difficult. You cannot just pay off the debt; it needs to be done over time. You first prepare a plan and stick to the plan. This requires discipline and a lot of sacrifices. It would change your life and lifestyle.

The first loans to repay should always be credit card loans. As mentioned earlier they are the costliest. Try by taking a personal loan or converting the credit card balance to a personal loan. This way you would have shifted from a high interest bearing loan to a lower interest bearing loan.

With your outgo coming down, because of lesser interest rates, next target the higher interest bearing loans. There might be pre-payment charges for repaying earlier, but it will still be worth it. Don’t just repay loans which give you a tax benefit, though the interest rate may be high, if you consider the tax benefit, it might be low.

As mentioned earlier, you could get a cheaper loan to repay a high interest bearing loan. You could borrow from your PPF, where the interest rate is 2% higher than the current interest rate. So if you are repaying a loan with interest rate or 12 % or more with a PPF loan, you are still better off.

Another method of repaying loans would be to liquidate investments. If your rate of return on investments is lower than the interest rate you are paying, it is better to liquidate the investments and use the money to repay the loan. Markets might go up, but it would be better to get out of debt first and then use the money saved to invest when you have funds in hand.

The cheapest funds you can get is by cutting down on expenses. Cut down your expenses and use the money saved to repay the loan. The faster you come out of the debt trap, you could start enjoying life better faster.

Is this the best time to invest in debts?

Once a friend of mine came to me and asked is it safe to put money in RBI Bonds? I did not know what to say, was he ignorant or was he pulling my leg. With so many scams around, people have just lost trust, especially in corporate bonds. The debt market was very good till now, with interest rates going up. It looks like the rates would start going down and this would be the best time to lock your money for a fixed rate of interest. It would be better to lock the interest rate for a longer period.

Now the question comes, how much should go into short term and how much into long term. This depends on an individual’s goals. Next question that would come up is where to invest. Should one go for corporate bonds or for government securities? Corporate bonds are issued by companies and government bonds as the name suggests by the government. So which are safe, definitely Government bonds. Corporate bonds carry a higher risk and that is the reason corporate give higher rates of interest. Higher the risk of not getting your money back, higher the interest rate.

Since Government bonds are secure, the rate of interest is a bit lower, but note the rate given by the government is usually taken as a benchmark. Government is borrowing heavily, this has happened, because of the fall in stock markets. Stock Markets? Yes, the stock market, since the government had planned some disinvestment, but did not do so, since it would have got the minimum base price. So what is the other way to get money to meet all its plans? Borrow, yes borrow, through bonds.

The coming budget will give us an idea how the bond rates would go. The reason is if the interest rates just keep going up, inflation will go up. So the government would plan to generate income through some other way. If it does happen, the interest rates would fall. But with high inflation and poor market conditions, businesses have also seen a slow down, they had issued corporate bonds, to ensure they would be able to complete the projects they had started. Their money is locked in inventories, because of low off take.

Hopefully as markets start recovering and inflation would come down, the business risks would be lower, leading to reduction of interest rates. So as we see, interest rates would go down, one way or the other. So what should you do? The best thing would be go for corporate bonds for the short term and Government bonds for the long term. In case you are not sure what to do, invest in Debt Mutual funds. These mutual funds would take care of assessing the risks. Yes, if you do the investment on your own, the yields would be better.

Best time for Bank deposits

Interest rates have been going up for some time now, but how long would they keep going up. From the way things are shaping up, it looks like they would start coming down soon. We can easily assume that the interest rates are at their peak; this would be the right time to lock your investments as good interest rates.

But what if you do not have enough funds to invest, why don’t you start a recurring deposit. Make it a long term recurring deposit. Recurring deposits are similar to SIP’s of mutual funds, in mutual funds there is a risk involved, but in case of recurring deposit, you fix the interest rate the bank would pay you. You make a fixed investment every month, which earns a fixed rate of interest.

As with any investment with a bank, recurring deposits also have a fixed tenure. At the end of the tenure, you get a lump sum, which is equal to the total amount invested, along with the interest earned on it. The best part is the minimum amount can be as small at Rs.100/-. Recurring deposits become more attractive for senior citizens.

Most banks give a higher interest rate for senior citizens. So if you are a senior citizen and you have some extra money and don’t know what to do, instead of leaving it idle in the saving bank account, open a recurring deposit account. But remember, it is like an insurance premium, a commitment, so invest only as much as you can commit over time.

Don’t default on you payment of regular deposit, as this would lead to a penalty, which is like reducing the interest rate you would get. Unlike a SIP with a mutual fund, where you could stop the SIP at any time, you cannot do it with a recurring deposit. Nor can you change the terms mid way. It’s a fixed commitment from both the bank and you.

Creating your retirement plan

We know that one day we would retire. We first start saving money for house, marriage, car, kids then kid’s education and marriage. By the time its time to retire and you find that now you have to start saving for retirement. With the time left, you would not be able to save much. But even then we should try and save, knowing that it will not be enough.

So we can start by preparing ourselves to ensure we are able to fix a leaky tap, an electricity point, tighten a loose hinge or any such job that will help save money, instead of paying for a plumber or electrician. As after staying for so long in the house, most of the things have reached a stage that they will start failing.

As we have mentioned earlier we should start saving, one of the options is to invest in a retirement plan or fund from an insurance company or mutual fund. There is another option, the NPS, this is a good option as the costs are low. Other option is to start investing in diversified large-cap mutual fund and as you come closer to your retirement start shifting to debt funds. After all you want more assurance on returns with less risk as you come closer to retirement.

You have been disciplined till now to meet your goals, so lets get a little more stick with ourselves as we start preparing for our retirement. SIP is a must. Cut cost to ensure you meet your goal. This will help after retirement as well. You won’t have to start feeling bad at that time, since you have already started cutting costs.

SIP with ECS is good, since the saving would happen without your intervention, and since you have given a commitment, you will keep it. Hope you have a PPF account, which has completed 15 years. Continue with it, you can keep going 5 years at a time and you can withdraw a certain amount every year in case of an emergency. Remember the interest is still tax free.

I mentioned sometime back that you should invest in large-cap funds, but do not put everything in mutual funds. Make a plan and allocate certain percentage to each of the classes of funds. Check the value of each fund on a regular basis and ensure that it is as per your plan, if the percentage is high in any of the class, remove some of it to bring it to the plan and put it into the class which has less.

This process is called rebalancing of portfolio. When you do this, you indirectly start booking profits, which helps in increasing the value of your portfolio and reducing risk. The best timeframe would be once a year.

Chose your investments in such a way that you do not end, paying tax, instead of paying yourself. We spoke so much about investment, be we should also plan a withdrawal strategy, to ensure it lasts our lifetime and we do not have to depend on anyone. During investment, we let the corpus grow, after retirement we want this corpus to start giving us returns. This return could be in the form of interest or dividend or withdrawal from Corpus.

Ensure that withdrawal from corpus is minimal, since with every withdrawal the guarantee of return is reduced.

Happy planning!

Limited Liability Partnership

We always say why work for others when we can for work for ourselves. But then we are worried of losing everything. As on starting a sole proprietary firm or a partnership firm there is no limit to your liability. To avoid this you can go for a limited liability partnership, LLP in short.

LLP is a firm which enables persons to take initiative and also gives it operational flexibility like a sole proprietary or a partnership firm with the benefits of limited liability. It is a legal form, which was available worldwide and now this legal form is available on India as well. It is a combination of Partnership firm and a company with limited liability.

LLP is a separate legal entity separate from its partners, can own assets in its name, where the partners have the right to manage the business as they want to. Unlike a partnership where one partner is responsible for the acts done by another, in an LLP it is limited to the contribution done by the partner to the LLP.

A LLP is advantageous because of comparatively lower cost of formation, lesser compliance requirements, easy to manage and run and also easy to wind-up and dissolve and no requirement of minimum capital contributions unlike a company. But the restriction is an LLP cannot raise money from the public.

One of the biggest advantages is it can continue its existence irrespective of change of partners or succession unlike a partnership. Also a company can become a partner in a LLP, which is not possible in a partnership; there you have to form a joint venture for a limited objective.

So why not start looking at starting a business as a limited liability partnership?

Asset Allocation Funds

Financial Advisors always tell us stick to your investment plan. Keep investing regularly asyou’re your plan. The plan is usually dependent on your age and investment objective. So they will tell you put X% in Equity and Y% in Debt etc. But tell me is it possible to keep regular track and then when the market goes up or down, or when the interest rate goes up or down, rebalance your portfolio.

At the same time we do not want to employ a portfolio manager, since his cost would be high and s/he will not look at small amounts. Also SEBI has increased the minimum size of portfolio to Rs. 25 lakhs for portfolio management services. So for a small portfolio, you have to do it on your own. For such persons there is an option, take a look at asset allocation funds.

These are funds which invest in different mutual fund schemes and keep the allocation in different funds depending on the pre-determined asset allocation. The asset allocation is done by a fund manager; s/he would take care of asset allocation as well as buying and selling funds depending on how they are doing in the market.

Though it does not replace financial planning, it helps us in a way. The fund objective would always be known, so if it is close to your financial plan, then you should go for it. There are usually two types of asset allocation funds, single manage asset allocation funds and multi manager asset allocation funds. Single manager funds are those which invest in funds on the same mutual fund house, whereas multi manager funds invest across different fund houses.

Just going by the definition, it is obvious that multi manager funds should be better. The most important is the fund manager has a wider choice. He is not stuck to his own fund house, where he has to choose the best from the worst, if the schemes are not doing well. This reduces the risk of the portfolio. This is the best if you have long term objectives and do not have time.

As mentioned earlier, you chose the scheme which is close to your objective. The schemes objectives usually remain fixed, but for an individual, his/her objective keeps changing over time, so as your objective changes, move your money to a scheme which is much closer to your most recent objective.

Should one invest in property

Many people who had invested in the stock market in the last one or two years are still waiting to cash out. In fact some have even vowed that they will never invest in the stock market. So many events took place and prices just kept falling.

These persons are now looking for a safe investment but with return. One of the options available to them is property. Property prices in India have consistently being going up. People are waiting for prices to fall, but no such luck. In fact in the last year or two those who invested in property actually have had some appreciation in their investment. This is one asset that offers stability and good returns.

Other than appreciation, there is another source of income, rental income. Remember we are looking at property as investment and not for staying. If it is purchased for staying it is a non-productive asset. It gives you continuous flow of income. Also as time passes, the rental income also goes up, but remember that as the property gets older the expenses also keep rising. But as the property gets older the demand might decrease. This all depends on the location of the property.

Buying property is not easy, so if you are seriously planning to invest in property, you need to do your research first. Not only on the property, but also the funding, since investing in property involves much higher funds, compared to equity. You should not go in for this investment without planning, because if not planned properly you could go into serious debt.

So, start collecting funds for the down payments. Start keeping you’re your funds aside in safe investments. Some of the safe investments are debt funds. As with equity investment, you start keeping funds aside. Once you have the funds aside, start looking for a good property.

If the property identified costs more than amount set aside, you can go for a home loan. Property is one of the few investments where loans are easily available.  Care must be taken to ensure the EMIs are funded for the tenure of the loan. If your income is large enough to pay the EMIs, you will have a good comfort zone. Or else, the rental income can be diverted towards the EMIs. It can also be a combination of both.

When a property is purchased and tenant identified the time spent on the property is considerably reduced. As time goes by the EMIs have to be paid. If well planned in advance, this process can go on smoothly for many years.

Capital appreciation is huge. Some properties appreciate more than others and it's important that you identify such properties with proper research. As you keep investing you will get better. As you go property shopping you will find that there are many more people like you who just invest in property.

Once the loan is paid off, the rental income is just sort of free money. If you really need money at any point of time, just sell the property.  As you would have realized, property purchase involves a lot of running about. So when you get tired running about, just sell all those properties and invest the money in debt funds and enjoy life.

Insurance – Buy Online

With the spread of internet, Insurance companies find it cheaper to sell insurance online. Since they do not have to do lots of paperwork and get rid of the agents commission. Of course there is the option of going through the agent, but then costs will go up. Why? Because the agents give you service and you pay for that service. But if that is true, then if you buy online you don’t receive service? You will, but you have to ensure that you take care and ensure you do not have to worry later.

What do I mean by that? When you go through an agent, he helps in filling the form; he takes care of all the small matters. It is a time consuming process, since you have chosen to fill the form online, ensure you fill the form with care. No pain is no gain. So if you save on premium, there would be some pain in filling the form, but it would only be once. This you have to go through so that when there is a claim, it is not rejected because of wrong information.

Another thing the agent does other than filling your form, is reminding you to pay your premium on time. This is very important or else your policy will lapse. Now almost all banks have ECS payment option, so just fill that form and be free of this as well.

As we always say, go for term insurance only, because that is what insurance is all about. Now what would be the difference in a term policy from one company to another, you guessed it right; Premium. So the best thing to do is compare the premiums of different companies for your age and term online.

So have you decided what insurance amount is best for you? If yes, compare the premiums for that amount. Now just because the premium is low, do not go for higher insurance, you do not gain anything for having a higher insurance. In fact you are just increasing your liability. You could use the savings to build your assets. Some companies might give you a good deal if you go for a longer term policy. But here again, your policy should be only till you are earning.

It’s always cheaper to buy a policy when one is young, so buy early and ensure that the policy lasts till you retire.

Should one get rid of insurance taken as investments

We all say you should take an insurance policy for insurance purposes only and not as investment. But Insurance companies come with different types of policies. So that means every insurance policy must be there for some purpose. Money-back policies give out periodic payments. Endowment policies help build a tax-free amount. Ulips help in wealth creation. So the first thing to do is find out if the insurance policy will help you taking your targets into account.

As we grow and take risks, usually our income will keep rising, so in this case the Money-back policy would be of no use, since the amount received at the end of the period would be very small compared to the investment made. Same with endowment policy, if you want guaranteed returns, put it in a Fixed deposit, which would give better returns even after tax.

Ulip’s would help but then it should be at a younger age and as you grow you could use your switch option and move the money to debt.

An insurance policy should ideally cover a person till he is earning and the amount of insurance should ideally be enough to help the persons dependent on him/her. This is because if something happens to you the financial dependency will go away from the persons dependent on you. Therefore if there are policies which mature before your retirement age they should be removed or extended till retirement age.

If circumstances have changed and you cannot afford the premium, you should discontinue the policy, because instead of helping you the policy is hurting you financially. Since insurance premium is like a regular liability. If you have built enough assets then there is no need for insurance policy.

The easiest way of getting rid of an unsuitable insurance plan is to stop paying the premium. This should be the preferred option if the insurance policy was just taken. It is better to discontinuing the policy with a small loss instead of continuing with the mistake just because you might lose some money. This is similar to the stock market, do a stop loss.

If you have paid a premium for 3 years or more, you can surrender the policy and get some money back. When you surrender the policy you lose the insurance cover, so if you want to continue with the insurance cover you can convert the policy to a paid-up plan.

A better alternative to surrendering your insurance policy and losing the life cover is to turn it into a paid-up policy. As in the case of surrendering, this is possible only if three years' premium has been paid. But if only some years are left it would make more sense to continue with the policy.

Have you got the right Insurance?

How many policies do you think you would require ensuring that you are adequately insured? Like investments should you spread them across different types of policies? What should be the amount to be put in different types of policies? Now what I am talking about is Life policies alone. You don’t know? You are not alone; there are many more persons like you.

Some persons treat life insurance like an investment for return, hence they go for the different types of policies. You should note that insurance is not an investment for return. You get a return only on the happening or non-happening of an event. Confused?

Many of us buy insurance as investment for return, but should actually buy it only as a cover for early death, so that our loved one’s do not suffer because of loss of income on account of our death. Funny, we call it life insurance, while it actually works as death insurance. Some buy insurance just because they tax benefits; this is the reason for having so many policies.

Before you buy an insurance policy, ask yourself if you really need one. In certain circumstances, you may not even need an insurance policy. If you do not have dependants, who are you buying it for? Also, if your spouse earns well, he or she may not require any financial support when you are gone. In such cases why should you spend money on premiums? It’s important to build assets and as your assets increase the need for insurance will decline.

Insurance became important, since as we kept growing we started creating assets, but creating assets is not easy. So to create an asset we take on liabilities. As our liabilities increase the need for insurance increases. So as our liabilities increase, we should start increasing our insurance, but as the assets increase and liabilities go down, you can stop taking more insurance.

The life insurance need of a person depends on several factors. There are also different ways to calculate this need. One of the simplest methods is to calculate the insurance requirement based on one’s future earning potential. The reason is if something happens to you, your dependents won’t have to worry about income. This is another reason, why insurance is usually brought on the life of a person who is earning.  

There is another way of calculating your insurance need; this takes into account the amount of money the family would require to maintain their current life style, in case something happens to the bread earner of the family.

One should carefully assess one's need for insurance and the features of a policy before signing on the dotted line. But what should you do if you have already bought an insurance policy that you now realize is wrong for you? What if you find yourself saddled with policies that offer you neither high protection, nor high returns?

Usually you should continue with such policies till the end. The Direct Taxes Code, which is likely to come into effect from April this year, states that an insurance policy should provide a cover of at least 20 times the annual premium for it to be eligible for tax deduction and other tax benefits. So if it provides less than 20 times and you had purchased it for the purpose of tax saving, then it would be best to surrender it. But if the time left is not much continue till the end.

You should be careful about ULIP’s, since the high charges are usually charged in the initial years. So if you have completed the initial years, continue paying premium till maturity, the returns would be better. If it is a single premium policy, no harm continuing it since you have already invested the amount.

Investment options for senior citizens

Senior citizens don’t like to look for complicated options to get returns for their investments. After all they have worked hard to earn that money and would like to lose it. At that age all they are looking for is making their hard earned money work for them safely and leaving the balance for their loved ones.

Depending on the risks associated, here are some of the options available are

Minimal Risk (return 8.2% to 10%)
Post office monthly income scheme, National Saving Certificates, Senior citizens savings scheme, Bank fixed Deposits

Medium Risk (return 10% to 13%)

Corporate deposits, Debt Funds, Fixed Maturity plans

High risk (return 13% to 15%)

Gold funds, Monthly Income plans, Balanced funds, Equity diversified funds.
As you can see the lesser the risk, lower the return. But at that age, they can’t afford the risk
The Senior Citizens' Saving Scheme (SCSS) is a good option. A person can invest up to Rs 15 lakh in this government-sponsored ultra safe scheme. What's more, you even get tax deduction under Section 80C for the investment in this scheme. An added bonus, recently the interest rate has been linked to the government bond yield in the secondary market. The interest is paid out every quarter and is fully taxable.

Fixed deposits are even better, with interest rates going up, many banks offering seniors more than 10% interest. These high interest rates could go down in the future. It's best to invest in fixed deposits of different maturities. Instead of making one lump-sum investment in a 5- or 10-year fixed deposit, spread it over. There are also corporate fixed deposits that offer higher rates than bank Fixed Deposits, but only go for the ones with a high credit rating.

Though National Saving Certificates were loved by everyone earlier, its best to stay away from them, since five year bank deposits give you the same protection and tax saving option with better returns.

If senior citizens are looking for monthly income from their fixed deposits, one of the options is to invest the amount in 3 equal installment over a period of three months, with quarterly payments. This way they will receive income every month.

While fixed deposits offer assured returns, it's a good idea to look beyond banks for debt investments. Debt funds, especially fixed maturity plans, can give higher returns than fixed deposits. What's more, these investments are more liquid and tax-efficient than fixed deposits. The interest earned on bank deposits, Senior Citizens Savings Scheme and National Savings Certificates is fully taxable. But when you withdraw from a debt fund, only the capital gain earned per unit is taxable.

So, if you invest when the NAV is Rs 15 and withdraw when it rises 10% to Rs 16.50, only Rs 1.50 of your withdrawal will be taxed. The balance Rs 15 is the principal investment and is, therefore, not taxed. After one year of investment, the profits are treated as long-term capital gains and are taxed at a lower rate of 10%.

The best thing about funds is the flexibility they offer. An investor can customize the withdrawals to suit his needs.

But how long will the money invested last or give you returns will depend on inflation. It is the worst enemy. Stocks and gold are their best weapons against inflation.

Most senior citizens prefer investments that offer assured returns, but what to do about inflation. The best option in such cases is to opt for a mix of investments with a certain percentage in funds and gold investments.

Another option would be to invest in monthly income plans (MIPs). These funds invest a small portion (15-20%) of their corpus in equities and are, therefore, able to generate better returns than 100% debt investments.

Many senior citizens have a big chunk of their net worth locked up in the real estate they occupy. Here again, they can opt for reverse mortgage their house.