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Are Stocks and Equities For Senior Citizens?

7 July, 2018

, Savings

Stock markets are only meant for those who are willing to take risks and can handle the volatility of the markets. So, per se, it is said that it is better for senior citizens to keep away from the stocks and equities and opt for safer investment options. The safer investment options available are the FDs, retirement or pension plans, NSCs, or other such governmental plans, etc. A few also consider mutual fund investments as well.

Indeed, it is true that stocks and equities are volatile and can, at times, wipe away a person’s complete investment in a day. Considering that one had to get by on the retirement savings for the rest of the living years, such risk-taking capacity may not indeed be possible. But, equally, there are also stories about how people who have taken the risks, have also managed to create more wealth. There is no gain without a little risk, after all. So, how safe is it for senior citizens to consider investing in stocks and equities? Is it wise, and what points need to be kept in mind for considering this? 


Considering the inflation and other rising living expenses, the returns from the safe, traditional investment options are certainly lesser than that of stocks and equities. So, in order to protect the erosion of the retirement corpus, it may be a good idea to consult a financial advisor and check out what options are available. As compared to the single-digit returns from the traditional investments, across the past few years, have on an average been between 14 to 15% annually.

Points to keep in mind

Before venturing into stocks and equities, it is always better to assess the situation and know what you have in mind and how risk-taking is possible. Discuss with a few financial advisors or wealth management providers, who can advise you about all aspects of the same. Understand what is involved, and how wise investments in safe stocks and equities can help you. 

Another point is to note that, it is never wise to put all your eggs in one basket. So, plan out your retirement corpus, monthly expenses, set aside a little amount for the rainy days, and then see what amount can be spared to be invested in stocks. A safe number to quote would be that not more than 25% of the whole corpus should thus be invested.

Also, good and experienced advisors can suggest you to also diversify your investments. Perhaps, the amount can be split up into mutual funds which are considered less risky and are able to provide long-term handsome returns. Also, immediate liquidity options are available in this, making it a rather safe bet. The rest of the amount can be invested in ‘safe’ stocks that are not likely to be highly volatile. Mutual funds and stocks also provide you with systematic investment approaches, like a small amount every month, instead of one big amount in one shot.

With some help, if required, you can easily identify those ‘good performing’ companies that are stable and consistently deliver good results as well as reward their investors with good dividends. These can increase your investment and also provide you with some leeway in money to handle some additional or unexpected expenses.

Trading options

If you have an idea about how stock markets and equities function, then you can approach any bank that provides a Demat account. Most banks will help you out with a relationship manager for this, who can assist and guide you and also teach you to operate this. So, if you are comfortable using technology, you can easily start operating your demat account on your own from home.

If not, you can appoint some service providers, who will manage your corpus for you for some annual service fees. They will keep you regularly posted about your investment performance as well. In fact, there are many options to even opt for such investments that will protect your principal amount. This in a way can help protect you from the market volatilities.

So, in effect, it is worth checking out the stock markets and mutual funds to understand if you can opt for it and how to play safe even in such investments.

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