Did you miss the early bus to build wealth through equities? Now, in your forties, or probably your fifties, you might be hesitant to invest in equities owing to the apprehensions about risks involving around equities. Well, we have good news for you. It’s never too late to build a secured future for yourself and your family, and the same applies to investments in equities. This article will help you with all your investment queries regarding equity investments. Read on to have a better idea.

There are two likely scenarios that you are in. Either you are nearing your retirement and wish to invest in equities, or you have already retired and wondering if you can generate a healthy income stream with equities. Let’s explore both these options.

Scenario 1 : You are close to your retirement

If you are retirement is pretty close, say five years or so, and you wish to create a decent retirement corpus, here’s what you should consider:

  1. Evaluate the collective value of all your investments including Employees’ Provident Fund (EPF), fixed deposits (FDs), small savings account, mutual fund investments, and any other type of investment.
  2. Evaluate the liquidity of these investments
  3. Draw a time horizon for all your expected expenses to turn into cash and cash equivalents.

If the amount is enough to bear all your expenses, estimated emergency needs, utilities while not compromising on your existing lifestyle for a good amount of time, say ten to fifteen years, you might consider assigning the remaining part of your portfolio towards equities and equity-related instruments.

Scenario 2: You wish to cater to your post retirement needs
One of the biggest drawbacks of retirement is unavailability of an active and regular source of cash flows. As a result, an investor is quite hesitant to risk their savings and invest it in risky investment options such as equities. Experts advise investors to plan their asset allocation strategy based on different parameters such as family size, current standard of living, accommodation, estimated expenses, etc. As a good thumb rule, it is a good idea to allocate at least 15% of your total assets towards equity-related securities to generate inflation-beating returns.

If you are still unsure about the right asset allocation strategy for you, you can consider allocating your assets equal to your age minus 100. This is a a popular investment strategy among retail investors. However, this strategy is not always effective and must not be taken as a final rule. It can vary depending on your risk profile, financial objectives, and investment portfolio.

You might be warned against the risks of investing in equities too late in your life as they are deemed to be risk investments which are not suitable for investors nearing retirements. However, if you have already met your financial goals and still have abundant of funds lying around, waiting to be invested, equities might not be a bad option. After all ,the higher the risk profile of an investment, the higher are the chances for significant returns. Understand the importance of investing and secure your financial future with equity mutual funds. Happy investing!

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