I meet a lot of people, and many of them are equity investors. However there are many people who are scared of equities, and constantly have this question:

I am 62 years of age and I have a portfolio with not much equity – some ELSS worth Rs. 2 lakhs in DSP’s Tax saver fund. Other than that all my money is in banks, ppf, scss, nsc and postal fixed deposits and bank fixed deposits. DO I NEED TO INVEST IN EQUITIES AT ALL?

Well, well. This is a difficult question to answer for sure.

Assuming that you have monthly expenses of Rs. 40,000 and you will live for say another 30 years you need this money to last you till you and your wife drop dead.

So if you have retired say 3 years ago and you now have a corpus of Rs. 4 crores, do not even bother about equity. Completely steady non volatile debt will work fine for you.

Take the other scenario that you have only Rs. 40 lakhs again your corpus is so small that you just cannot afford to put any money in equity. Maybe you can put about Rs. 5L – the amount is too big for you but too insignificant to make a material impact on the total returns that you get on your investments. And in the first signs of panic you will withdraw.

If you have say Rs. 1.5 crores you could put about 20% in equity and enhance the quality of life in your old age.

Most of you forget that old age is difficult – and old age without money is impossible to live.

A well kept and good old age home will cost you upwards of Rs. 50,000 per month per person…apart from the capital cost of buying a small apartment in which you live. That alone comes to upwards of Rs. 6 crores over a 30 year period – after providing for inflation. Too many people who write blogs will tell you that you can retire with Rs. 1 or 2 crores. God bless them if they think so, and God bless you if you think so.

Frankly, my math tells me avoiding equity in retirement is possible ONLY for the sons in law of the country. The baboo(n)s with an indexed pension OROP wallah…for all other mortals like us, it has to be equity.