FIXED DEPOSIT & DEBT FUND SUIT SENIOR CITIZEN BEST
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FIXED DEPOSIT & DEBT FUND SUIT SENIOR CITIZEN BEST


“What is the best saving instrument for us now”, asked a worried senior citizen to his friend.

“I am worried myself. How do I advice you? Replied his friend. Both the friends decided to visit one of their chartered accountant friends for his advice. All three friends sat together over an evening cup of tea in the chamber of their friend, Mr. Hazarika, who was also a specialist in tax and investment matter.

Mr. Hazarika advised them after seventy years senior citizens need not invest in equity unless the risk taking capacity is very high. The volatility of share market is unpredictable. So persons dependent on income out of investment should not invest in equity or equity related instrument generally. Both the friends asked him then what should senior citizen like them do?

Mr. Hazarika said that all the invest able funds available should be distributed to fixed and fluctuating income instrument like Bank fixed deposit, Debt instruments like debt fund, gilt fund , liquid fund and equity based arbitrage fund, depending on the tax paying factors. Both the friends become awe struck and conceded that they had not heard much about the arbitrage fund, gilt fund and debt funds. Only vaguely they were aware of Bond fund of Reserve Bank of India which is no longer exist. Mr. Hazarika advised his friends that the senior citizen must learn more and more on investment avenues now a days. The inflation cuts away more than thirty percent of income. This must be protected. What is to be done now?

Mr. Hazarika asked whether both of them are tax paying citizens or not. Both replied in affirmative. In that event it would be appropriate for you to divide your investment into two segments. First invest at least sixty eight percent of your invest able amount in Fixed deposit in Banks and balance in tax saving instruments.

“Why sixty eight percent? Why not sixty or fifty percent? Asked one of his friends.
“Because you are sixty eight years old. You are still capable of taking some risk we are deciding on the premises that no more equity exposure from seventieth years only.”

“Oh! We understood your reasoning now”!
“But it is not necessary that you have to invest in equity at all! If you are still risk averse
You can keep all your money in Debt instruments from now onward. But that would give you limited return of 10% to 12% percent in total...


Both the friends unanimously replied that they could subscribe to equity at least 10% of the invest able income for they needed to beat the inflation.
Hazarika advised them that in that case they can keep 5% of their investment in balanced fund.
Which Balanced fund to be subscribed?
“Go to valueresearchonline.com and you can subscribe to any five star or four star funds. You can consult moneycontrolonline.com also. But my preference is value research. It is independent, honest and valuable advisory”, said Hazarika.

Since Seventy three percent of you invest able fund had been taken care of now balanced twenty seven percent should be deployed. Out of this twenty seven percent if you have existing PPF account you can keep 7% percent there subject to a maximum of Rs 70,000. And the balance twenty percent you can invest in IDFC long term Bond fund or in ICICI gilt Fund. These are not taxable and giving return of 13% to 20% percent at present. Alternatively you can keep the amount in Arbitrage fund with no tax and with return of around 8% to 11% all the time. You must know during present world’s financial crisis when equity tumbled down to -50% only funds which withstood the turmoil were Bond fund, gilt fund and arbitrage fund. The return of Bond and gilt fund may go down if interest rates stop going down or if it comes up. But Arbitrage funds hold it own irrespective of melt down. You can have faith on this fund. It is all weather friend of senior citizen with no tax impact.

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