Question

What mutual funds would you recommend for a 65 year old retired school teacher who is extremely conservative in her investing? She doesn’t want to lose one dollar. She has retirement money to live on but she is concerned about inflation and taxes. What recommendations do you have for her? Be very specific in your recommendations. She has 100,000 dollars to invest and hopes to never need the money, but needs to know it is there for a rainy day.

Answer 1

Well, I would recommend the following for the retired school teacher:

Debt fund: As the investor is risk averse, we will not recommend her to invest in funds which have investments in equities. The safer option would be to look for a debt investment mutual fund where the investments are into debts, government bonds and other similar instruments. Investment in debt will help her investment grow at a gradual pace and she can rely on the investment when in need. This will have low risk as well as higher returns when compared to bank deposits. Debt mutual fund managed by a good company will help the investment to grow in a proper way as the investments keep on changing as per the market performance of various companies. This will also help her hedge against the inflation which will leave the value of the investment low. If the investment is in bank deposits or bonds the returns are usually in the range of 3-4% and an inflation of 4% or above will add no real value to the investment, but a debt fund will give her the return of 7-8% leaving an added value return.  So my suggestion is Debt mutual fund