Want inflation beating return post-retirement? Here's how equities can save the day
Best ways to invest Rs.1 crore
Spread it across various instruments for optimal returns with minimal risk.
For retirees, the challenge is to deploy their nest egg in instruments to earn decent returns without taking too much risk. They don’t have the luxury to wait it out in case the markets decline, so they need to put the bulk of the corpus in safe instruments. At the same time, a 100% fixedincome portfolio is not a good idea. Some portion of the corpus must be allocated to growth assets so that the portfolio is able to beat the march of inflation.
The retirement corpus should be spread over a basket of instruments. The first option for any retiree should be the Senior Citizens’ Savings Scheme. This government managed Post Office scheme gives assured returns of 8.2%, which is higher than that offered by bank deposits to senior citizens. Put the maximum Rs.30 lakh in this scheme. If your spouse doesn’t have a separate account, you can put another Rs.30 lakh in her name. Do this before the RBI cuts rates because interest rates of small savings schemes are linked to government bond yields and are reset at the beginning of every quarter. Some portion of the corpus must also be put in annuities. Annuities offer assured income for life, which reduces the longevity risk. At least 30% of the nest egg should be invested in an annuity. When pension plans from insurance companies and NPS investments mature, some portion of the corpus is mandatorily put in annuities.
For some retirees, tax is a big headache that reduces
