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How my parents should invest the proceeds received from sale of a house

My retired parents wants to sell off one of our house in Patna and expect a sale proceed value of Rs. 38 lakhs. Now they are not sure as where and how to invest and utilize this amount. They don't enjoy any pension. How can we plan to appreciate this amount over span of next 5-7 years. Please guide?

Sep 6, 2016 by Deep, Patna  |   Mutual Fund

First, your parents should consult a tax advisor and figure out if any capital gains tax needed to be paid on the sale proceeds received. If yes, then there are schemes where your parents can invest the desired amount or pay taxes as decided by their tax consultant.

However, in case no tax need to be paid and the entire amount received is tax free post indexation, then your parents can invest in mutual funds. However, the schemes to be chosen for them should be according to their risk taking ability. For example, if their risk taking appetite is low then they can invest in debt funds. If it is moderate, then they can invest in debt oriented hybrid funds or MIPs, if is moderately high then investing in large cap funds or balanced funds makes sense.

In nutshell, considering their age and occupation, investing in risk taking schemes is not advisable. You may try this calculator to know which fund is suitable for them https://www.advisorkhoj.com/tools...

You may also like to check the returns of top performing schemes from the below links –

Top performing debt funds

Top performing MIP funds

Top performing balanced funds

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