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The person is aged63 years. Has no pension plan. And would not like to work in the future. But would like to maintain the same standard of living. Investing in shares of companies directly could be too risky. Investment in fixed deposits are safe but the return is a little above the current rate of inflation. Equity mutual funds are risky but they give high returns in the long run. The person would not like to put all the money in long term investment as there could be a medical emergency at this age. What % of his funds should be invested into small caps or large caps equity, what % in index funds that follow the valuation of the share market ,would balanced mutual fund be a good option?
Good and very obvious question; hold10-15% of cash in hands for emergencies / excegencies or buy medical insurance schemes.
Invest25% in Blue chip securities (high dividend paying companies) and50% in the fixed term returns debentures or fixed deposits to ensure that you receive secured monthly income to meet regular expenses.
Indeed everybody is concerned about his/her hard earned money; which is invested in a bank or in securities. There are several ways to ensure that your funds are in safe hands, such as:
1. Do thorough due diligence check about the reputation and stability of the companies/bank you intend to invest in.
2. Read the investment brouchers carefully.
3. Ask for the monthly statement of investment accounts and its progress and observe the movement of funds.
4. Diversify your funds in different sectors to manage the profits.
5. Ensure to invest in the funds where Capital security is provided.
6. Avoid highly speculated and volatile securities.
