Should a retiree invest in the stock market?

Should a retired person enter the stock market?
- TK Sinha

Around 20 years back, it was conventional thinking that one should not invest in the stock market because the fixed income generated reasonable returns. The way investors would have participated or invested in equity was very risky as the market was unsafe. But now, it has become much safer, and the vehicles you invest in have become more accessible. Most importantly, the way interest rates have come down, it is important for most retired people to invest in equity. It is no longer a matter of choice. You have to invest in equity in a certain manner necessarily, and you have to learn it as quickly as possible.

Because if you don't invest in equity and if you do not have more than adequate savings, you run the risk of outliving your corpus by investing only in fixed income. So not investing in equity could be risky. The earlier you appreciate this fact and why it has happened, the better it is for you. Earlier, people used to have different options of deriving income from their capital either by having a house, rental income, pension, or high fixed income returns. You no longer have that luxury. You don't have a choice now but to compulsorily invest in equity.

This article was originally published on September 10, 2021.