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How should I allocate my retirement corpus to different asset classes?

Dhirendra Kumar highlights the importance of distributing your retirement corpus efficiently among different asset classes

I'm a retired government employee who doesn't have any major liabilities and all my expenses are covered by my pension. I also have some Rs 2-4 lakh as a contingency fund. I want to know if I have any corpus, then how should I allocate the same to mutual funds, gold and fixed deposits.
- Manohar

In my opinion, one should not look at mutual funds as an asset class. Instead, it must be considered as a way to invest in other asset classes. So, when you invest in equity mutual funds, you are getting exposure to the equity asset class.

When it comes to gold, I don't consider it a long-term asset. But if you still want to invest in it, the form in which you are buying makes a difference. The finest form of gold that is available in India is Sovereign Gold Bonds (SGBs). These bonds give you a guaranteed interest of 2.5 per cent per annum, in addition to the price appreciation of gold. The capital gains realised on the redemption of the bond at maturity is tax-exempt.

Most of your money should primarily be in equity and debt. You may invest in a mixture of mutual funds and government-sponsored schemes like Senior Citizen Saving Scheme (SCSS) or fixed deposits. Alternatively, you may invest your entire corpus in aggressive hybrid or equity savings funds which will help you achieve such an asset allocation.

Also, make a start if you have never invested in market-linked investment products. Consider buying two funds of the above-mentioned categories and that is all.

For your emergency money, consider investing some portion of the same in liquid funds, fixed deposits, bank account or even in your cupboard locker if you feel some money will be required urgently. This simple plan can help you achieve all your needs.