Father’s Day 2024: Top alternative investments to secure dad’s financial future

By 2050 the demographic of Indian senior citizens is set to hit the 340 million mark When it comes to financial support many Indian seniors have traditionally relied on familyHowever changing social dynamics present unique financial challenges for those in retirement Currently only about 23 per cent of the elderly have access to any form of pension Also the lack of familiarity with digital banking and modern financial instruments can leave them vulnerable to financial mismanagement and fraudTo build resilience postretirement Indian senior citizens need accessible financial education and tailored advice On the occasion of Fatherrsquos Day we roped in fintech entrepreneur Bhuvan Rustagi the cofounder and COO of Per Annum and tax expert Manikandan S from Cleartax who take us through four alternative investment options that can help to secure your fathers futureWhat are the most suitable alternative investment options for retireesRustagi As our parents or inlaws reach their 60s navigating the financial landscape can become challenging In these circumstances alternative investment options offer the advantage of providing a stable and secure future for them and their families These investment instruments are an excellent way to diversify portfolios with options like P2P lending nonconvertible debentures NCDs government schemes and real estate investment trusts REITsThis diversification helps senior citizens manage their finances smoothly and build resilience for the future Alternative investments not only help diversify their portfolios but also offer inflationhedging capabilities against market volatility thereby reducing overall riskHow can alternative investments be balanced with traditional assets in a retirement portfolioRustagi A major concern for retirees is their monthly income Not having a constant source of income compels each individual to plan well for their retirement1 One now starts exploring investment platforms that can generate enough income2 Here traditional investment mediums like FDs and equity instruments are available as well as Alternative Investment Funds like P2P investments3 These traditional investments provide 67 per cent pa Whereas P2P investments range from 1112 per cent returns4 Ideally based on monthly expenditure and requirements one may select the way they want to allocate their funds5 Say if he wants a higher income he may decide to invest more in P2P as it provides higher returns and can give you stable returns For example it may be 60 per cent for P2P and 40 per cent for FD6 Options of retaining the interest amount for further compounding can also be a great option to raise the overall return Say you can take 75 per cent of the interest out and keep the rest quarter for further compoundingHow to optimise these investments to maximise benefits and minimise risksManikandan To minimise your taxes choose investment options like PPF and SSY and enjoy an ExemptExemptExempt EEE status meaning contributions interest earned and maturity amount are taxfreeRegarding mutual fundsgains from listed equity funds held for more than one year are taxed at 10 per cent on the gained amount exceeding 1 lakh in a financial year Shortterm gains are taxed at 15 per cent However debt funds gains are added to your income and taxed as per your slab rate irrespective of the holding periodThe applicable tax rate on ULIP is the same as mutual funds Tax applicability would depend If the premium amount in any previous year exceeds Rs25 lakh if not then your entire return would be taxfreeWhen it comes to FD earned interest will be added to your income and applicable tax rate would be according to your tax bracket But if yearly earned interest will be more than Rs40000 then the Bank will also deduct 10 per cent TDSTax planning An efficient tax planning can minimise taxes and enhance your investment returns Prioritise taxfree investments like PPF and SSY They not only provide assured returns but also come with tax benefits Invest in instruments eligible under Section 80C of the Income Tax Act like ULIP and TaxSaver FD You can claim deductions up to 15 lakh per year Holding investments for the long term especially equity mutual funds can reduce your tax liability And dont forget to Keep detailed records of your investments and expenses to ensure you claim all eligible tax deductionsAlso Read A beginners guide to saving and investing in your 20s