A call from Mr S

Last week I happened to get a call from Mr S. For sake of anonymity I am not mentioning the full name here.

He was a wonderful man in his mid-60s, well settled and financially sound. He happened to send me an email when he saw my blog on Kerala Treasury Bank FDs. I gave him my phone number and he called me.

He wanted to understand how he can invest in Kerala Treasury FD from Bangalore. I explained to him that this is not possible and he needs to visit one of the branches in Kerala.

Later on, he went on to explain his financial plan to me and asked me for suggestions. He has 2 flats in Banglore, 1 on rent, and has invested 15lakhs each in PMVVY Scheme and Senior Citizen Savings Schemes each. His rent + income from interests is more than his monthly expenses and has an emergency fund and health insurance. He also has some investments in Mutual Funds and still continues to invest monthly from his savings. His concern was he had more money and wants to put it in a way so as to get more monthly income. Yes, that is a comedy here. His current income exceeds his expenses and he wants more income. If you ask him what is the use of generating more monthly income, the reason would be to invest back.

He doesn’t understand the guaranteed interest generated like that would be subject to low-interest rates and income tax. But he still has a dream of getting a monthly pension even though he is damn rich.

I asked about his Mutual Fund investments. He mentioned being very happy about the gains he made in various schemes. The problem is he doesn’t understand the market cycles and different fund categories. At the age of 65, he has over 10 lakhs in small-cap and more than 40 lakhs in debt instruments. The large and midcap investments are negligible. I did suggest he switch his investments from small-cap to large-cap and index funds. It was a casual talk I really doubt, he would. We agreed to meet soon.

There are many queries I do have for him in our next meeting.

I always advise staying away from small-cap in your 60+ years at least. Have a plan to save some for your kids and then finish the rest before you die. I would personally spend my later years travelling and enjoying life. Have a proper plan. A youtube video isn’t an answer to your financial plan. Meet a professional.