Your Questions Answered: Which investment options I can explore for my retired parents?

Q. I am Anik Shah, well settled in the US for the last 10 years. My parents are retired and live in India. I want to explore some investment opportunities in India and also ensure sufficient funds for their medical needs.

Hello, Anik! Ideally, you need investment options that can take care of regular medical needs and also any unexpected, large requirement.

We assume that your parents are over the age of 60, and we estimate that you will need a medical corpus of ₹ 50 lakhs. Based on these assumptions, you may consider three options.

Bank FDs

Fixed deposits (FD) in banks are a common solution. The interest rate will depend on the bank, the duration of the deposit and the market conditions. Your parents may opt to withdraw the interest amount on a regular basis and use it to fund their regular expenses.

Mutual funds

Mutual funds invest in a diverse portfolio of stocks, bonds, and other securities, thus providing an easy way for individuals to gain access to a variety of financial instruments and asset classes. You may set up a systematic investment plan (SIP) in a suitable hybrid mutual fund that will help you gradually build a corpus for your parents.

Health insurance

Anik, we hope your parents already have health insurance coverage. If not, purchasing health insurance for your parents at this age may result in higher premium and lower payout. Some insurance companies give you the option of buying a policy in your name. The payout will be determined based on your age and medical status, and it will be passed on to your parents. You will need to invest a lump sum of money and begin an immediate or deferred annuity with a guaranteed cash flow. This allows for higher payouts for a limited time.

Based on the funds available and the health status of your parents, the ideal solution could be a combination of these and other products. You will want them to have easy access to liquid funds. You want to give them the reassuring cushion of a large corpus. And you want them to be covered in case of an emergency that calls for large funds at short notice.

Anik, we suggest you consult a qualified, experienced financial advisor to assess your specific needs so that your investments and the health of your parents get the professional attention both deserve.

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