InvestorQ : What should retirees do if the market crashes?
shivangi Arora made post

What should retirees do if the market crashes?

ramya Bhaskaran answered.
2 years ago
Retirees are highly dependent on their investment income, and sometimes they make mistakes that could turn up their entire investment. Here’s the most common mistake that retirees make and how they can avoid it:

The only mistake that people make around this age is becoming too conservative about their investments. Yes! At this age, most of their income is from their investments, and hence they try not to lose their corpus. So, either they shift to fixed deposits that pay lower returns or to debt funds. However, one must consider the impact of inflation on their investment and make provisions for the same. I believe one must invest some portion of their corpus in equity to get a much-balanced return.

I will try to explain this by an example:

If one invests Rs 1000 in any debt fund, they receive interest at 6.5% per annum and Rs 1000 on maturity. So, the only return one is getting over their investment is that interest on bonds/debt funds. At maturity, one will only receive Rs 1000. If you consider the time value of money, Rs 1000 today will value a lot more after five years.

If you invest in equity, the corpus invested grows over time. If you invest Rs 1000 today, they will become Rs 1500 after five years one will also receive a dividend on your investment in the meanwhile. This is simply to depict how your investment grows over time in equity. But in debt funds, it is actually diminishing. As inflation increases, the value of money decreases.
So, one should make equity investment part of their corpus as well.