Page 28 - Seniors Today -Volume no1
P. 28
Money Matters
Financial Planning for your Second Innings
Deepak Gagrani highlights the pitfalls seniors must avoid
to enjoy one of the most glorious phase of their life
In an era of falling interest rates and increas- as a way to determine investment allocation to-
ing life span, financial planning has assumed wards equities or other growth asset class. Such a
significant importance for senior citizens to generalisation has been one of the biggest invest-
effectively manage their retirement corpus. ing fallacies being practised and has negatively
Gone are the days when a passive investment impacted the portfolios of many seniors.
strategy could help generate commensurate
returns to take care of sustainable income “Successful investing is about managing risk, not
levels. A well=defined investment strategy, avoiding it” as said by Benjamin Graham is rele-
aligning the investor’s goals and objectives vant at all stages of life
with their risk profile, is as important in the
wealth management stage of an individual, A more rational approach of asset allocation is to
as was in their wealth creation stage. One has segregate funds basis their end-objectives.
to remember that ‘An individual retires; their • Investments that generates regular income to
money has to continue to work for them’ take care of routine expenses
As one steps in retirement, flush with a size- • Emergency Fund
able cash corpus, they are at risk for making • Money which is not needed for at least 5 years,
some common financial mistakes. Certain should be invested in growth asset class such
seemingly small investment mistakes can as equities, real estate etc depending on pre-
hinder the financial planning process consid- vailing asset class cycle.
erably. A few pitfalls which one must avoid to
enjoy a glorious phase of their life. With the increasing life span, the retirement stage
can also be a fairly large period. The last category
Extremely Defensive Portfolio of investments will not only help retired citizens
As an investor embarks the retirement phase, to comfortably enjoy their retirement phase, but
there is a tendency to adopt a very defensive also leave a financial legacy that outlives them, for
strategy and invest the corpus in regular their heirs.
but low yielding income generating prod-
ucts, thereby leading to miss-out of the large Excessive Indulgence
growth potential of the corpus. Most of us Exactly opposite of the above, when an investor
have come across the rule of ‘100 minus age’ gets a large lumpsum corpus on retirement in
SENIORS TODAY | Volume 1 | Issue 1
