I superannuated in 2020 and still invest in the Public Provident Fund (PPF). I don't want to invest the entire amount in mutual funds. So I continue to invest the maximum possible amount in PPF every year after investing in the Senior Citizens Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS). Am I right in doing so?
- Taposh Mukherjee
It's good to know that you have always invested and are still able to do it. This means that you have some other income avenues. But for someone who, in his retirement, can earn and save so much that you can exhaust your 80C investment limit and still make a living, you are doing the most risk-averse thing with your investments. You are not taking any chances with your money.
Your money in the Senior Citizens Savings Scheme (SCSS) and Public Provident Fund (PPF) is sheltered by the sovereign guarantee. Thus, these investments will fail only if India as a country fails. Till India remains, this thing will work. The Post Office Monthly Income Scheme (POMIS) is also of the same category.
If you have successors and wish to leave a larger estate for them, you should take a little chance with your investments. That's because most investors do not understand that the risk lies in thinking short-term with investments. Equity is very risky if you are investing for three months or three years. However, if you invest in equity for 10-20 years, the likelihood of losing money is zero. Had someone invested in Sensex (hypothetical) on the worst possible day (market at high) and redeemed their investment on the worst possible day (crashing market) in a 10-year period, the likelihood of losing money is zero.
Thus, if you are likely to remain invested for a very long time, which it looks like, since you don't require your money for consumption, leave a larger estate by investing in equity. In equity, the risk gets reduced with a large investment horizon. Thus, start investing a meaningful amount in mutual funds, assuming you can save a decent amount after meeting your expenses.