Photo: iStock
Photo: iStock

It’s important to inflation-proof investments

Safety is important for you but you also need to ensure that the corpus remains inflation protected

I retired 2 years ago and invested most of my retirement funds in fixed deposits (FDs) for 2-3 years at an interest rate of 7%. I also have two SIPs of 5,000 each. I have an unmarried daughter. I get a monthly pension of 34,000. Where should I invest to keep my money safe as well as get good returns? My FDs are in nationalised banks. Should I shift these to private banks for better interest rates?

—Dolly Moga 

Prima facie you have two financial goals to provide for—your daughter’s marriage and to have enough corpus for retirement. Besides the one-time investment, you have a monthly pension which appears to be enough for you as you are also doing monthly investments in SIPs.

Safety is important for you but you also need to ensure that the corpus remains inflation protected i.e. the growth in capital should be at least equal to the inflation rate to ensure the purchasing power of the corpus does not diminish. For this, moderate risk can be considered.

Your portfolio can be a combination of debt products. You can continue investing some part of your corpus in FDs. You can pick the best deposit rates available from among nationalised and private banks.

In addition, you can have short-term and accrual debt funds. These, if held for the long term, will offer you a FD-plus return which will also be tax efficient.

You can also consider having hybrid equity funds, also known as balanced funds, and hybrid dynamic asset allocation funds which take exposure both to debt and equity and can even reduce equity exposure, subject to the fund manager’s call. The investment in equity-oriented schemes is also to be held for long term. Lastly, you should have a medical insurance policy for yourself as well as your daughter. 

To read more queries, go to livemint.com/askmintmoney

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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