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Where should a retiree invest the proceeds of a bank FD?

Dhirendra Kumar talks about the best investment option for conservative retirees seeking regular income

I am a 74-year-old, and one of my fixed deposits worth Rs 25 lakh is maturing shortly. Where should I invest the amount considering the interest rates may increase soon? I am fully invested in government schemes like SCSS, PMVVY and Post Office MIS.
- Arun Serdeshpande

I'm quite tempted to suggest that you invest in an equity savings scheme. If you invest in fixed deposits, the money is lying with the bank without providing much returns. Hence you should look to optimise your return with equity savings funds. However, these funds will be volatile, unlike fixed deposits, but they are not as volatile as pure equity funds. These are funds that invest 15-30 per cent into equity and the remaining in fixed income and arbitrage. The equity and arbitrage portion comprises a minimum of 65 per cent of the portfolio, making them viable for equity taxation. While this is one relatively riskier avenue of investment, if you look at it from a fixed deposit time frame of three to five years, I don't think it is risky. In the short run, it might look scary.

The other investment avenue would be short-duration funds. These give returns like those of fixed deposits, providing you greater liquidity. If you need the money sometime in between, you can have that.

The schemes that you are currently invested in, such as the Post Office Monthly Income Scheme (POMIS), Senior Citizen Savings Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVYY), provide you income at regular intervals. While you are using the income derived from these schemes, the underlying capital is not growing at the same rate and tends to deplete. Hence, the most suited investment option for you would be equity savings funds. Else you can go for short-duration funds.

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