Even if you are less than 60, you can invest in the Post Office Senior Citizens’ Scheme.

Q. I will be retiring in May 2020 at the age of 58. On retirement, I will have about ₹1 crore in savings. I also own a house. Kindly advise on how to invest my money for the next two years and after I become a senior citizen.

Ram

A. Even if you are less than 60, you can invest in the Post Office Senior Citizens’ Scheme. The law says: “an individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.” So, you can invest up to ₹15 lakh (maximum permitted) in your name as soon as you retire. The balance can be invested in a combination of large bank FDs, post office time deposit and select top-rated corporate deposits. If you are familiar with mutual funds, you can also consider liquid funds and do a systematic withdrawal plan (SWP). It would be very tax efficient. Assume you generate an average 7%, or ₹7 lakh of income, from your corpus per annum. If this is more than adequate, then reduce investments in the above safe options and invest a small proportion in some quality hybrid funds under the category of equity savings. This will also provide some tax efficiency and earn debt-like returns.

Q. I am married and have children. My home loan EMI is ₹10,908 and my personal loan EMI is ₹6,200. My wife wants to close the home loan with ₹4 lakh from pledge of gold. I feel we should close the personal loan…

Sabarinathan

A. It is good to close the loan that does not provide any tax benefit. In your case, personal loan repayment should come first. However, we see little need to pledge gold to close any loan. Is your interest rate on pledging gold lower than the personal loan rate? It is unlikely but if that is the case, then it can be a reason to pledge. Else, my candid answer would be to sell gold now (prices are high) and repay, if you don’t need that gold and your monthly cash flows are becoming tight, post EMI.

Q. I’m 23 years old and currently preparing for a competitive exam. I have savings of ₹50,000. Can you suggest some investment plans for 1-3 years?

Karthik

A. For your time frame, you can consider a combination of large bank FDs, short duration debt mutual funds that are consistent and some exposure to equity savings fund. Given your short time frame, we do not wish to recommend any equity exposure.

Q. I have made mutual fund (MF) investments in physical statement of account (SOA) form through a lump sum investment mode. Please advise on the benefits of conversion of physical SOA MF units into an online demat mode.

Varun Dambal

A. Physical form of investing is not an optimal way to organise your investments. You should consider going online. However, there are several platforms that provide you online MF services without demat form. In other words, they are like having a statement, except that it is all online and you can view your investments at any point in an app or laptop. Demat form of investing also helps you consolidate your investments and view them online (assuming your broker is indeed online). But it is not a necessity. If you are already investing in stocks, then holding MFs and stocks in the same demat can help you consolidate. If you aren’t, then you could look at other online options to avoid demat or brokerage charges.

(The author is co-founder, Primeinvestor.in)

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