India is home to a 104 million-strong population of people who are aged 60 years and more. And settling right into the twilight years of their lives, these senior citizens often combat a multitude of emotional and financial troubles, which are often dismissed or misunderstood by the younger lot.
Recently, Indian industrialist Ratan Tata launched Goodfellows, a startup focused on fostering inter-generational companionship, or friendships between the young and old.
The rationale? “To bridge generational gaps, for no one knows what it’s like to be lonely,” he said.
As age gets to them, senior citizens are increasingly isolated from relations and also from the management of their hard-earned, lifelong earnings.
As SEBI registered professional Anil Upadhaya explains, “Financial planning is extremely essential for the overall wellbeing of senior citizens. For them, money is a significant means of emotional, mental strength, hope and comfort. Before his death, investing legend Rakesh Jhunjhunwala had a Bloomberg terminal installed in his ICU unit when he was critically ill. Money goes beyond just providing physical comfort to senior citizens.”
Today, as the world celebrates and honours senior citizens, you can ensure that they find joy not just in their friendship with you, but also with their money. Here are some surefire ways financial planners suggest that can kindle a solid relationship between money and your elderly kin:
FOCUS ON CAPITAL PRESERVATION
As Shifali Satsangee, financial planner and CEO of Funds Veda, puts it, “Capital preservation and protection should remain primary objectives. For this, one can invest in schemes like Senior Citizen Savings Scheme, special FDs for elderly, and Pradhan Mantri Vaya Vandana Yojana.”
“However, what is absolutely compulsory is to plan and budget ahead for expenses. And in that column, health should receive special attention,” she continues.
Financial planner Sanjeev Dawar says, “As a rough framework, investing in the five-year senior citizen savings scheme offers 7.4% p.a, which has a maximum limit of Rs 15 lakh is desirable. Similarly, one can invest in the five-year Post Office Monthly Income Scheme, which proffers 6.6% interest p.a. If one has a surplus available, one can put aside money in the Vaya Vandana Yojana, which has a bar of Rs 15 lakh.”
“Other than that, guaranteed Annuity plans, AAA Corporate FD, RBI floating bonds and more for your portfolio in old age should not be ignored, as the ultimate objective is inflation-proof returns,” he says.
Another important component in a senior’s portfolio is to keep in mind liquidity i.e quick availability of funds when needed. As risk appetite at this age is usually low, conservative debt funds can prove handy.
Viral Bhatt, personal finance planner, and founder, of Moneymantra, elaborates, “Conservative funds follow the guiding principle of capital preservation and take minimal risks for wealth generation. Hence, it is ideal for low-risk investors and people who are retired or nearing retirement. As there is exposure to high-quality stocks, low-risk investors get an opportunity to earn better, regular returns compared to investing in a pure debt fund.”
PLAN, CONSOLIDATE AND ENJOY
“This is also the time to consolidate investments and shift to more financial assets from physical assets,” says Dawar. Hence, timely succession planning is desirable.
Satsangee, too, suggests having a power of attorney handy. “This will ensure that your financial wishes are carried out in an appropriate manner.”
The most resounding suggestion is to enjoy this money. It can either be in the form of buying your favorite things, vacationing, or even trading.
According to 85-year-old Dattatraya Dhoble, who is a keen trader and investor in stock markets, it’s important to understand the markets, irrespective of your profession. And once you get a hang of it, it’s amazing to participate.
“Every morning, I see the TV and make trading decisions basis the rise and fall of the stocks. I have a diary and a Sharekhan account where I record everything. At this age, if I have the chance of multiplying my savings, why not? I understand the risks involved and only trade with my surplus,” he notes.