Dear Sir,
My Mom(homemaker) is 58 years of age. I am the only child of them -not dependent on them. My dad(Retired -68) wants to invest about 50k-1 lakh lumpsum(yearly) in a new PPF account for Mom for next 5 years.
I think PPF is not a good choice for them considering the fact that it has locking of 15 years. I have advised them instead to invest in some good long term debt funds like 'Birla Sun Life Dynamic Bond Fund - Direct Plan (G)'
Question: Do you think this(my proposal) is going to be safe bet considering their age or you would recommend something else?
Please share your valuable advice.
6 Answers
Hi,
As opined by you PPF though a good fixed income saving option, it may not be a better option for your parents.
Do they get monthly pension or have sufficient monthly income from other sources to meet their living expenses?
Do they have sufficient Emergency fund to meet any unforeseen expenses & also have adequate health cover?
What is the main investment objective for saving/investing around Rs 1 Lakh for next 5 year? Are they (or your mother) dependent on the income generated by these investments?
Dear Mr Sreekanth,
Thanks for your reply. My dad is a pension earner. So they are not dependent on this money. They have observed that after meeting their emergencies/expenditure, they can save upto 1 - 1.5 lakhs in a year. Being at their age they wanted to invest the money in safe bet option keeping their capital protected. As FD rates have come down, they are looking for some better alternatives to get healthy return having their money protected. The return can be just higher than FD/PPF but they can't afford to loose their capital. That's their objective.
Hi,
Considering the scenario, it might be beneficial to invest in Short-Term Debt Funds or Dynamic Bond funds. They can also consider to invest some portion of money in Arbitrage fund if safety of capital and better tax adjusted returns are priorities.
Kindly Read:
- Best Debt Funds
- Best Arbitrage Funds.
- Best MIP Funds
- MF Taxation rules
Thank you sir for your advice. Can MIP funds also be considered if tax savings is not an issue?
Are MIP funds a good choice for keeping the money somewhat safe expecting better returns?
Yes, they can consider investing in Aggressive MIP fund with Growth option, Example - Birla Sunlife MIP II Wealth 25 plan.
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