Should a retiree invest in gilt funds?

Anil has recently retired from a government job and will be receiving a monthly pension of about Rs 40,000, which would be sufficient for his expenses. Besides, he has a corpus of about Rs 35 lakh, which he wants to invest to generate some income occasionally, either annually or every six months, to meet unaccounted expenses. At the same time, he would want to keep this money safe so that he can use it during the later years of his retirement or an emergency. Anil is considering gilt funds, corporate bonds and company deposits to invest his retirement corpus in. He is lured by the fact that the current returns of gilt funds are even more than those of equity funds. Besides, these funds are safe as they invest in government bonds. Given that the interest rates of FDs are quite low, he is planning to invest this corpus in gilt funds and is seeking our opinion. Don't think that gilt funds are risk free Although these funds are safe and carry negligible default risk as they invest in government securities, they do carry the inte

This article was originally published on November 26, 2020.