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When it comes to managing your finances after retirement, planning needs to be more concrete, especially because usually a large amount is involved then and expert guidance may be required to put it in order. It is important to deploy the retirement corpus built painstakingly by you wisely. When Chandigarh-based Col Naresh Khatter, a retired Army officer, retired in 2016 (at the age of 54) and got a lump sum, he felt the need for consulting an expert.

“You cannot envisage what is in store for you in times to come. However, what you can do is to prepare yourself for the best of your abilities and with that thought in mind, I met Col Sanjeev Govila (retd), a Sebi-registered investment adviser (RIA)," said Khatter, now 58.

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Investment journey

It’s not that Khatter never invested at all. “I started investing from the year 2004, but then, I had no idea about financial planning. Also, I didn’t have much capital to invest. Most of my investments were in initial public offers (IPOs) and shares. I didn’t have much knowledge about financial avenues or the financial markets then," he said.

After meeting the planner, he zeroed down on the important financial goals of his life, which included building an emergency corpus, wealth creation and vacation planning. The last one has been put on hold as of now because of the covid-19 pandemic. Since Khatter is retired, he has no liabilities or goals related to children’s education or marriage.

Emergency fund: To build an emergency corpus for six to 12 months, his planner, after examining his risk profile, asked him to set aside some money from his retirement corpus. The emergency corpus was based on the monthly household expenses that he generally incurs. This goal was easily sorted, thanks to Khatter’s ready retirement corpus.

Wealth creation: When you are retired, it is not advisable to invest all your money in equities. So how does a retired person find ways to create wealth? The financial planner put him on a moderate portfolio for this goal.

Khatter is interested in wealth creation to secure the future of his son, 29, (who is currently working and married), and his own wife Anuradha Khatter, 56, who is a housewife.

“We made a complete retirement plan wherein we took the details of Khatter’s family members and did complete risk profiling. We kept some equity mutual funds in the portfolio and moved a major portion of the portfolio to debt and hybrid mutual funds since I wanted to keep his profile moderate. It is very important to understand that despite not having major goals, Khatter is retired," said Govila.

Khatter wanted to increase equity investments and take more risk as he gets sufficient pension income and has no dependants. However, Govila explained to him that it was important to be careful. “We had enough availability of money and there were no very big goals lined up in near future, we didn’t want to take him to have an unnecessarily risky profile because we believe in taking only that much risk which is required."

Asset allocation strategy

The planner invested in a combination of equity and debt funds such as dynamic asset allocation, hybrid and ultra short-term funds. More precisely, 30% of the money was in equity and 70% was invested in debt-related instruments. The planner reviews his portfolio every six months.

Besides his investment portfolio, Khatter has some real estate investments from before he met the planner. He gets rental income from these. Apart from mutual funds, he also invests in small savings scheme such as Senior Citizens Savings Scheme (SCSS) and post office savings account.

Since Khatter and his family get sufficient health insurance coverage under the central government scheme, which covers them even after retirement, the planner didn’t suggest him to take additional coverage. While understanding his life insurance need, the planner found that he has accumulated enough assets and income streams for his spouse and son to independently care for themselves. Also, his son is already a self-sufficient adult. Besides, he has no big liabilities lined up in the near future.

Khatter has managed to hang his boots in style and hopes to live securely in the future.

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