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Should a retiree transfer money from FDs to equity funds?

If your expectation is capital preservation, then you can consider moving to liquid or overnight funds, says Dhirendra Kumar

FD rates are falling on a monthly basis. For senior citizens, the rates are now somewhere around 5.5 per cent. With the market getting better, should I (a senior citizen) transfer money from FDs to equity funds through SIPs in the next three-four months?
- S.P.S Jain

No. Generally, when one invests in a deposit, the primary expectation is that there will not be any value erosion. And if this is your expectation too, then you should not invest in equity funds or any market-linked investment product. For you, there are only limited alternatives, including short-duration, liquid and overnight funds. These avenues can provide slightly better returns to you, while the risk of any fall in your investments is low.

We cannot trust the market, as it tends to surprise us - either in the form of dramatic upsides or downfalls - when we least expect them to. Currently, there is a lot of apprehension surrounding the market as there is an expectation of a grim economic outlook, but the market is rising. It is almost on the path to recovery from the fall that happened in March. It is difficult to predict the short-term market movements, as it keeps on changing.

I would say that you should not invest your deposit money in the market. Only if it is your long-term money (five years or more) and you are okay with market volatility, then consider SIPs in equity funds.

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