72667Deepfake videos by top bosses of NSE and BSE circulating on net!

For many, retirement represents the end of their earning potential unless they opt to work as advisors, freelancers, or educators. For retirees, it is critical to make the best possible use of their retirement assets to minimise the tax burden and provide a steady stream of income. However, for many senior citizens, constructing a retirement portfolio comprising a mix of fixed income and market-linked investments remains a challenge. The problem is to avoid outliving one’s retirement money – one retires at 50 or 60 years of age, while life expectancy may be as high as 80.

The following are a few investment possibilities for retirees looking to earn some passive income. The objective is to construct a retirement portfolio using a combination of these items.

Rental income

When it comes to real estate, the demand for housing is rising, primarily by the growing population in India and the increase in spending power. This indicates that it can be a good idea to create that additional source of income by putting a commercial or housing property on rent. However, for doing that, you need to invest in places that embark on high demand and high prices.

Senior citizen saving scheme

The Senior Citizens’ Savings Scheme (SCSS), which is probably the first option of most seniors, is a must-have in their financial portfolios. As the name implies, the programme is limited to elderly citizens and early retirees. SCSS is available to anyone over the age of 60 through a post office or a bank. Early retirees may invest in SCSS after obtaining their retirement funds, provided within three months of receiving them. SCSS has a five-year duration that can be extended by an additional three years after the scheme matures. Currently, it offers an interest rate of 7.4% per annum.

Fixed deposits

Old is gold, and fixed deposits never go out of flavour irrespective of the kind of investors. A plus point for retirees is that the FDs interest rate is guaranteed, which keeps them stay away from the ups and down of investing in equities.

Monthly income scheme (MIS)

The Post Office Monthly Income Scheme is one of the schemes where you can invest a specific amount and in return receive a fixed interest amount each month. Individuals can contribute up to Rs 4.5 lakh, and jointly you can invest up to Rs 9 lakh during five years. Its fundamental purpose is to safeguard capital. The interest rate for the quarter ending 30 September 2021 is 6.6% per annum, payable monthly.

Equities

When someone retires, and the non-earning phase will likely last another two decades or more, putting a portion of the retirement assets in equity-backed products becomes critical. Remember that retirement income (interest, dividends, and so on) is vulnerable to inflation, even during the retired years. Equities, according to studies, generate better inflation-adjusted returns than other assets.

Depending on one’s risk tolerance, a specific percentage of assets may be allocated to equity mutual funds (MFs), with additional diversification through large-cap and balanced funds.

Monthly income plans may also include some equity exposure (MIPs). Retirees are recommended to avoid thematic and sector funds, as well as mid-and small-cap stocks. The objective is to achieve consistent returns rather than focusing exclusively on high but erratic returns. A retiree may wish to preserve a sizable amount in debt funds due to their ease of liquidity.

It is important to note that the exposure to equity should depend on the risk profile and time horizon of the investor. If there are chances that one might need these funds before 3-5 years then one should probably stay away from equities in the sunset years.