2nd Innings Financial Liberty

               

Consider this: You have always been smart, financially aware, meticulously planned your future and the silver days. You are confident taking inflation into consideration, the corpus you have built or are building would be more than sufficient to take care of your post-retirement days -- the most basic and standard fallacy in most of our lives. What is paramount is not the accumulation but smarter investment, diversification and planning the maturity timelines, to ensure they are able to take care of your expenses too, while they grow and assure you and your beneficiaries dividends in future.

There are a plethora of saving schemes for senior citizens. But, with time not on their side, senior citizens look for investment avenues that carry minimal risk.Here are a few financial instruments that you ought to have in your portfolio to achieve this goal.

• Senior Citizen Saving Scheme (SCSS):One of the safest for senior citizens, with the interest being paid out quarterly (liquidity), backed by central government debt funds (risk), and only a 5-year lock-in (tenure)
• Pradhan Mantri Vaya Vandana Yojana (PMVVY): A government-backed scheme, it comes with no credit risk and a longer tenure of ten years. The scheme was to end on March 31, 2020, but the central government decided to extend until March 31, 2023 due to its popularity amongst retirees
• Life Insurance Annuities: Unlike PMVVY and SCSS, annuities offer guaranteed returns over a much longer term of 30-40 years, covering your entire retirement phase.
• G-Secs: Being a sovereign security, it is highly secure, and provide average stable returns. With longer tenures, and an option to exit, if the need arises, these are very lucrative instruments, guaranteeing semi-annualised payouts

Alternative Investments: Is it a Safe Bet?

While traditional investment avenues such as MFs, stocks, PPFs and the like, have been around and have been the preferred choice among investors and financial enthusiasts, there are other investment avenues available which are not known to many but might generate better returns than traditional investments. There investments are called as alternative investments in which risk tolerant investors can invest.

Alternative Investments are the non-traditional investment options and hence do not invest in traditional investment assets like equities, bonds, cash and bank deposits. Investments in alternative investments include private equity, private debt, hedge funds, vintages and collectibles like wine, art, paintings or cars. There’s still ambiguity whether to consider real estate as an alternative investment or not, but of late commercial real estate has got the interest of financial advisors, industry experts and investors' interest globally.

The beauty of any financial product or solution, whether it is the "tried, tested, recommended and suggested" (by the previous generations) PPF, Life Insurance (by LIC) et all, is that all of them come with a pinch of salt and pepper (pros and cons). While comparatively lower liquidity, absence of a clear benchmark to decide fair value, thus also leading to a lack of clear direction in valuation of a commodity (as part of the investment), the most worrisome factor is that historically the segment has been tarnished with  a few shams and scams (but look at it what has not, Stock Market scams, residential real estate, MF closing down). Remember High Risk High Gain, so while the risk of a downside is high, so are the benefits of an upside. Alternative investments come with the satisfaction and benefits of diversified portfolio, shield against the volatility associated with unit-linked investments and as stated much higher assured returns.

As oft-stated in advertisements "MF are subject to market risks", similarly in case of alternative investments, personal financial acumen and knowledge or having a financial advisor with a sharp aptitude and knowledge is paramount to secure your investments and gain from the upsides through 3Ps - Purpose, Patience, Perseverance