My wife and I aged 60 and 62, respectively, have only a monthly rental income of around Rs 3 lakh. We have no financial liability except the marriage of our son, which may happen within one-and-a-half years. Together we have around Rs 60 lakh in FDs. Our monthly expenses are around Rs 75,000 to Rs 1 lakh. We want to generate more income for a comfortable future life. Please suggest how we can manage our finances and generate more income.
Reply by Rajiv Bajaj, Chairman & MD, BajajCapital Ltd.
First, for your son’s marriage, setting aside some money is a great idea. At least Rs 15 lakh is a good starting point. You can consider putting this money into a fixed deposit or a liquid mutual fund for safety and easy access.
For your overall investments, putting Rs 30 lakh into a balanced mutual fund is a smart move. Balanced funds provide a mix of equity and debt, giving you both income and risk reduction. Consider starting a systematic investment plan (SIP) with Rs 10,000 per month in an equity mutual fund. SIPs are perfect for regular investments, even if it's a smaller amount each month. They can help your money grow steadily over time.
It’s essential to rebalance your portfolio regularly, maybe once a year. This ensures that your investments align with your risk tolerance and goals, which can change over time. One key piece of advice: don’t panic; sell when the market goes down. It’s tempting to do so, but it’s often the worst time to sell. Stay calm and stay invested through market ups and downs.
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If you’re a senior citizen, here are some additional tips:
Look for mutual funds with low expense ratios. These fees can eat into your returns, so lower is usually better. Check the fund’s track record. Look for funds consistently delivering positive returns over the past few years. Match your fund choice with your risk tolerance. If you’re conservative, opt for funds with a lower risk profile. If you’re comfortable with more risk, go for those with a higher risk profile.
Remember, investing is a long-term game, and it’s always a good idea to consult with a financial advisor to tailor your investments to your specific needs and goals.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)