I will be retiring in a few months time. I have already invested fully in post office monthly income scheme. I am going to get a terminal benefit of 14 lakh without any pension benefits. I already have a small exposure to mutual funds balanced scheme in HDFC, Sundaram and FT India. Please suggest a suitable investment plan.
Sreenivasa Murthy
There seems to be some misunderstanding here. The investments you have made in balanced funds have the potential to erode your capital. These funds invest nearly 60 per cent of the portfolio in equities and the rest in debt instruments.
The volatility of equity is such that it can decrease the value of the entire portfolio. If you have very strong feelings against capital erosion then balanced funds may not be the right place for you.
At the end of the day mutual funds represent investments in the market and these are subject to market risks. The value of your investment may fall or rise and you may lose your entire capital also. There is no guarantee that investment objectives will be met and you should be aware of this.
Otherwise balanced funds are a good way to achieve long-term growth of capital at lower levels of risk as compared to a pure equity scheme.
This article was originally published on April 15, 2004.
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