Investing for retirement (which is called investing in the accumulation phase) and Investing during retirement (many of us will be investing even after we retire) can be as different as chalk and cheese. At the first stage we are looking for growth and safety. In the second stage we will be looking for liquidity, current income and some moderate growth (to offset inflation).

There are various stages of retirement investing. In your early stages of life (some of you may be lucky enough to start investing in your 20s, but largely retirement investment starts in the 30s – say 32-34 years of age.

In your 30s your retirement is at least 20 years away which means you can concentrate on equity based instruments (like ELSS, Other equity mutual funds, Unit linked plans with a higher allocation to equities, direct equities and the like).

As your age increases you can and should reduce your exposure to equity. However once you reach the age of say 70 you should completely exit from equity other than an index fund. Other forms of equity involve some active management, while the index fund does not. So all the need for equity (say 30%) should be met by only one instrument – the large cap index fund (currently it means a sensex or a nifty fund).

What happens to your investments post retirement? Now is the time to shift from a largely equity portfolio to a debt portfolio.

Post – retirement investments are likely to be in various stages. Stage 1 could be from age 55 years to age 65 years. During this time there may be some income coming in from some commercial activity.

Second stage could be from age 65 years to age 75 years. Here the income is mostly from investments, expenses have reduced – the travel may no longer be enjoyable! At this stage expenses have come down in most cases, except for medical expenses. It is a time when the need to ‘think’ about investments should be reduced dramatically. A good portfolio at this stage should be index funds and RBI Bonds other than bank fixed deposits.

Stage three could be from age 75 years to age 85 years. At this stage you do not wish to be very active in your investments – it has to be simple investments like bank fixed deposits. The advantage is you are not worried about  inflation. So you can do a steady exit from your Index funds also.