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How should a retiree invest in debt and equity?

Dhirendra Kumar discusses the suitability of aggressive hybrid funds when it comes to investments by retirees

I am 65 years old. Since the bank interest is going down, I want to invest Rs 40 lakh in the debt market and equity to hedge inflation. How should I do this?
- Rajeev Kumar

To answer your question, I need to know whether or not you need any income from this investment in a guaranteed way. If you need that, then you need a different strategy.
Assuming that you do not need a regular income and this is a supplementary investment to protect the worth of your overall capital, invest this money in aggressive hybrid funds. Here, typically a third of the money is invested in fixed income and the remaining in equity. These funds are a steady take on growth and do not really crumble when the markets go down. Also, they are able to provide you with decent participation as and when the markets go up.

But an important thing is that Rs 40 lakh, which you want to invest, should not be invested at one go. This is particularly important money and the principal erosion of this money by catching a market high can be devastating for you. So, spread this money over the next two-three years and invest every month in a disciplined way in one or two aggressive hybrid funds.