Regarding investing my parents money in Mutual Funds

Q & A Forum › Category: Mutual Funds › Regarding investing my parents money in Mutual Funds

Pratik Mavani asked 9 years ago

Hello Sreekanth, I have been a regular follower of your MF articles and have been an ardent investor based on your recommendations. Today I have a query on arranging some finances of my parents which had long been invested in the banking system. Since the banking system no longer yields affordable returns and my parents are very old, I want to help them by recommending them to invest their money in good and reliable mutual fund schemes. Their criteria is to earn stable returns over a period of 5 years. Ideally, the bank FDs provide hardly 7.25% returns even for senior citizens, so anything near double-digit returns will make them happy because the money is growing. They will not be interested in high-risk investments because there is a chance to lose money, but any instruments that are stable and make more money than bank FDs would be great. Can you please suggest how can I plan that? The amount is a lot (their lifetime corpus), so I want to make sure I don't end up making any wrong decisions. Also, please suggest if SIP or lump sum, what could be better in such a scenario. Thanks in Advance, Pratik Mavani +91-80955521**.

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Sreekanth Staff answered 9 years ago

Dear Pratik, Considering the inputs, you may suggest them an Arbitrage Fund (for emergency fund purposes) and you may suggest them Short term debt fund and MIP (growth) funds for next 3 to 5 years. Ex : Franklin Low Duration Fund, Birla MIP Wealth 25 plan, SBI MIP Floater etc., Kindly note that MIP funds do carry low to moderate risk. I am not suggesting equity funds as you have mentioned that they do not want to take high risk! Related articles : https://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/ https://www.relakhs.com/debt-funds-types-benefits-risk-vs-return/ https://www.relakhs.com/best-arbitrage-funds-returns/

mavanipratik replied 9 years ago

Thank you Sreekanth for the inputs. I will have a look at your suggested articles tonight and get back to you for further help!

Pratik Mavani replied 8 years ago

Hello Sreekanth, can you also suggest some equity and balanced funds considering lump sum investment is my choice?

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Sreekanth Staff answered 9 years ago

Dear Pratik, Thank you being a loyal reader! I am assuming that these investments are for wealth accumulation over a period of next 5 years and you/your parents are not expecting any regular income from them, am I correct? I have highlighed few investment options in the below article, you may go through it and revert to me with more queries (if any) ; https://www.relakhs.com/lump-sum-investment-options-retirees/

mavanipratik replied 9 years ago

Yes Sreekanth, we want to park some good amount in MFs so that we yield good returns after 3-5 years. We have the bandwidth to manage regular expenses, so that is not a problem.

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Sreekanth Staff answered 9 years ago

May I also know, if they adequate heath insurance cover and do they have any dependents/financial liabilities?

mavanipratik replied 9 years ago

Hello,

Yes, they do buy yearly health insurance which covers their hospitalization and other medical expenses. Apart from that, there aren’t any liabilities like loans or children education/marriage or anything else.

I am just worried that nearly all their life’s earnings are in banks and FDs which yield only 3.5-4% and 7% respectively. Considering inflation, that is under par growth for your wealth. So I am thinking to divert their investments in some conservative mutual funds offering better returns.

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Sreekanth Staff answered 8 years ago

Hi, You may consider balanced funds like HDFC Balanced fund. Kindly read : https://www.relakhs.com/best-balanced-mutual-fund-schemes-review/