Your Financial Plan

Suresh Parthasarathy | Updated on January 08, 2018 Published on January 07, 2018

I am 69 and my wife is 65. My daughter works for an IT company. But she is not financially independent, she and her son (my grandson) are my dependants.

I own the house we all live in.

I am a consultant and wish to retire in 2019. With interest rates falling, is it good to redeem a part of my FDs and sell my plot to invest in a mutual fund?

NP Haran

Switching a part of FD to equity is not a bad idea.

Senior citizens are feeling the heat due to falling interest rates. But it is also to be kept in mind that just to earn higher return without understanding equity, investors should not think of moving all fixed deposits to equity.

Even though some mutual funds declare monthly dividend, it is not a guarantee. However, balanced funds have delivered a better return of 16 per cent and 8.6 per cent over five and 10 years, respectively.

If you invested in fixed deposits in 2008 for 10 years, you would have earned a pre-tax return of 8.5 per cent.

But the redeployment risk is high now.

Do sell the plot and withdraw 50 per cent of fixed deposits and invest ₹52 lakh in mutual funds. You can draw monthly ₹34,700 (8 per cent annual) to meet the household expenses.

With fixed deposit return of 6.75 per cent, it will account for ₹12,600. You will still face a shortfall.

Continue working as a consultant, at least a few days every week, to meet the shortfall. Once your daughter stands on her own feet financially, you can quit completely. Be vigilant and book profits when you get abnormal returns from the mutual fund.

The writer is a registered investment advisor and founder, Send your queries to

Published on January 07, 2018
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