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Mr. Iyer was not only surprised but also relieved when his son Rahul visited him and presented a detailed financial plan for his retirement which covered everything right from meeting his basic expenses to covering needs like hospitalization. Rahul is back in the US now and working for an IT giant in Silicon Valley having taken care of one of the major financial goals of his life. He made it happen with a disciplined approach towards investment.

Financial planning for elders/parents is a completely overlooked need. It however forms a crucial part of the portfolio/investment planning especially if you are residing outside India and your parents are in India. Financial Planning is similar to setting a road map; it’s a 360 degree plan and should account for contingencies too. It helps to plan for the unforeseen by making a provision for the same.

Planning needs to be followed by disciplined execution i.e. Investments. Here we can consider investments made by the parents during their young age i.e. the savings from EPF/PPF and also investment done for them by their children. However NRI’s have limited options for doing investments in India and the same has been mentioned below;   

Investment avenues for NRI’s in India

Following are the investment avenues wherein an NRI can invest on repatriation basis:

Following are the investment avenbues wherein an NRI can invest on non repatriation basis:

The avenues which are linked to markets like mutual funds bear higher risk as compared to debt securities. However one can consider investing in equity mutual fund schemes if there is sufficient time for their parents to retire. If the retirement term is near then it will be recommended to invest the same in debt oriented avenues.

Planning for the elderly requires that certain basic needs are taken care off with a conservative approach. Needs like monthly pension required and medicinal expenses are a must. One can plan early by taking a health insurance which supports during the later part of the age; ideally it is always recommended to take one in the early age as premium is low, cover is high and even some of the ‘pre existing diseases’ get covered. Post retirement the corpus built from investment should be parked in debt avenues which provide regular income, however if the payout is high then one can consider tax free avenues in order to reduce tax burden if any. Tax free bonds could be one of the avenues; with returns of  7 percent - 8 percent and also help save tax for the investor.  

With appropriate planning, one can not only help his/her parents leave a legacy that will last generations but can also help them in growing and creating wealth continuously throughout their retirement. Following principles can be considered to achieve the same:-

1. Avoiding Financial Mistakes
2. Make sure they have enough liquid funds for any financial contingency 
3. Monitor and review portfolio constantly