How 'bucket portfolio strategy' helps senior citizens post-retirement1 min read . Updated: 20 Apr 2021, 01:40 PM IST
- Bucket portfolio strategy helps a senior citizen to address its financial requirements post-retirement
On account of falling bank fixed deposit (FD) rates and variable nature of small saving schemes’ interest rates, senior citizens are finding it difficult to beat the inflation from their traditional investment options. According to tax and investment experts, it's time for the elderly citizens to follow 'bucket portfolio strategy' that has provision for emergency funds, regular income, balance income and investment options to beat the inflation.
Elaborating upon the 'bucket portfolio strategy' for senior citizens Manikaran Singhal, Founder at godmoneying.com said, "Bucket portfolio strategy helps a senior citizen to address its financial requirements post-retirement. It makes provision for emergency fund, regular income, balanced income and fund to beat inflation for the retiree. For emergency fund, one needs liquidity in one's portfolio and in case of senior citizens, it is more important, so investing in bank FD has to be continued. For regular income purpose, schemes like Pradhan Mantri Vaya Vandana Yojana (PMVVY), Post Office MIS Scheme, etc. are recommended. But, to beat inflation, long-term debt mutual funds are advised."
Asking senior citizens to invest in debt mutual funds with more than 3 year time horizon SEBI registered tax and investment expert Jitendra Solanki said, "Debt mutual funds with more than 3 year time-horizon helps senior citizens to beat the inflation as average inflation growth is at around 5.5 per cent to 6 per cent."
Solanki said that in debt mutual funds with 3 year time-frame, an investor can expect to get at least 7 per cent return. If we discount the 20 per cent LTCG with indexation benefit available in debt mutual funds, net return post-income tax payment would fall around 6 per cent.
So, it's high time for the senior citizens to follow ‘bucket portfolio strategy’ and make themselves financially equipped to meet all kinds of post-retirement financial needs.
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