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Rohini Salunkhe, 59, government employee and Vishnu Salunkhe, 65, retired as a general manager
Rohini Salunkhe, 59, government employee and Vishnu Salunkhe, 65, retired as a general manager

Avoid erosion of capital, mitigate market risks in your golden years

At the start of 2019, Salunkhe was worried because defaults and downgrades of companies affected some of his debt funds but his planner helped him rejig the portfolio

There was no retirement age in the company where Vishnu Salunkhe, 66, worked as a general manager. But he chose to retire three years ago to fulfil his dream of travelling around the world. His wife, Rohini, 59, a government employee, has applied for a voluntary retirement scheme. Salunkhe has been a saver all his life, which helped him retire comfortably at 62 years. But towards the beginning of 2019, the economic slowdown, which resulted in ratings downgrades and defaults by corporates, started worrying him as he saw his debt portfolio getting affected. He did not want any capital erosion at this stage. His financial planner Steven Fernandes, founder of Mumbai-based Proficient Financial Planners, helped him rejig his portfolio to mitigate the risks.

When Salunkhe retired, Fernandes spread his debt portfolio across different products to minimize the risks. His debt investments had a mix of liquid, ultra short-term and credit risk funds, besides fixed deposits (FD). Even FDs were spread across public sector banks and non-banking financial companies. About 3-4% of his debt portfolio was also in a non-convertible debenture. “He has long-term goals for which some of his investments are also in equity mutual funds," said Fernandes. The Mumbai-based couple has two sons, Vishal, 36, and Pushkar, 26. Their long-term goals include their younger son’s marriage and helping both children buy their own houses.

Three of Salunkhe’s debt funds were hit due to defaults (they constituted 2-4% of his investments in debt funds), but he didn’t see any capital erosion. Salunkhe was still uncomfortable. “He is an experienced investor and understands that equity can be volatile. But he was uncomfortable about the defaults in the debt space," said Fernandes.

Though the rejigging of funds assured Salunkhe, he still worries about the impact of slowdown on his investments. “I have no other source of income but the investments. A small hit on my corpus can affect my goals for which I took retirement though I had the option to continue working," said Salunkhe.

Close to his retirement, most of his debt portfolio was in FDs. The planner helped him diversify into debt mutual funds.

“When events such as the scam at Punjab and Maharashtra Cooperative Bank occur, I wonder what if I was one of the victims. When DHFL went into insolvency proceedings, I thought I was lucky that I hadn’t invested in the company’s NCDs," said the retiree. The two NBFCs where his FDs are locked, at interest rates of 8.65-8.75%, are triple-A-rated and are also among the largest in the country.

When he retired, his employer told Salunkhe that they would be hiring him for consultation on new projects. Though he didn’t have plans to rely on the consultation income after retirement, Salunkhe thought that such projects could help grow his retirement corpus. “The slowdown has impacted the company. Forget about the new projects, none of the company’s plants are working to their full capacity," he said.

The current economic environment is tough for retirees to navigate. Take the help of a planner if you find yourself stuck.

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