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Earning regular returns from fixed income investments is a common trait seen among most retired people. In addition to this group of investors, there are other types of investors too who may require a regular income stream from low-risk investments. For them too, looking at fixed income investments would make more sense, rather than other risky and volatile investment products that may not guarantee regular returns.
"For retirement, financial planning has to be done at the start of the earnings phase and during the retired phase it should have a continuous periodical cash flow to meet the living. For this, investments in early phases are to be equity-oriented and in later stages, nearing retirement phase, is has to be debt oriented. This should be planned in such a way so as to receive periodical cash flow in the form of dividends, systematic withdrawals plan (SWP), interest payouts, etc.

While deciding on fixed income investments that would give regular returns, and this more so for the retired people, one should always keep the taxation angle in mind, investment advisors and financial planners said. In deciding the type of fixed income in which an investor should put his (/her) money, what should come first is the post-return tax burden of the person. If the investor is coming with a low corpus, in all probability he (/she) will have to pay almost no tax even if the annual return from the corpus is about Rs 5-7 lakh.

The next step is to have a well thought out guess about the current health of the person. This is important because that would give some idea about the number of years the person would live, and during these years he/she will have to meet his/her financial expenses from the returns generated by the corpus. "If the person is in good health, chances are that he (/she) will live for about 25-30 yeas post retirement. 30 years is a long time, so he (/she) has to think about inflation eating up his (/her) money.

 
In such a situation, the investment strategy for the person should be to invest a part of the corpus that he/she doesn't need immediately into the stock market, and definitely only in the shares of blue chip companies. For example, the person comes with a post-retirement corpus of Rs 50 lakh. Of this, say it is calculated that he/she will not need about Rs 10 lakh for the next 10 years. In this case, this Rs 10 lakh should preferably be invested in good equity mutual fund schemes or stocks. Historically, it was seen that in 90% of the cases, money invested in stocks for 10 years, have given positive returns. In case the extra fund is invested in the market, that can create some kind of predictability in the long run, investment advisors said.

For this person, the balance could be invested in bank FDs and tax-free bonds for safe annual returns. These people should follow three basic principles while investing in debt instruments:

1) Never put a large chunk of money in a single investment;
2) Never consider any investment as a permanent investment; and t Never look for high returns in this (Rs 40 lakh corpus in the example). If you get a return which is 2-3% above the rate of inflation, you should consider that as a good return.

Usually, retired people are more likely to look at debt investments than others. Insurance & Investment Consultants in New Delhi, one of the challenges that many retirees often face is the optimum selection of investment options for efficient deployment of their retirement funds.

For the salaried individuals, the total cash inflow at the time of retirement can run into lakhs of rupees. This can be in multifarious permutations and combinations of provident fund, pension, superannuation, gratuity, leave encashment, etc. Often, money also pours in from long-term investments like public provident fund (PPF) and insurance policies whose maturity concur with the time of retirement. The deployment of such a massive and heterogeneous variety of funds has to be done in a manner ensuring a perpetual inflow of tax efficient income in the absence of any monthly salary or anticipation of business income to meet the day-to-day expenses till lifetime.

 
Some of the most useful fixed income investment options which are available in the market now.

 

With post-work lifespan increasing, park money in mutual funds or blue chip stocks to beat inflation

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