Retirees begin 2nd innings in stock trading

RETIREES are turning the biggest traders in the market. Investing and trading have become their new hobbies.

Interestingly, the retirees, who believe in the philosophy of 'do it yourself', have taken some online courses on share trading and resorting to trading on their own.

Most of them have started joining various training programmes to learn various market strategies. Most of these oldies are weak on the technology front and keen to learn. Being retirees, they have already created ample wealth and already have a decent regular income.

Madanan Marar, a retired ONGC official, has been trading in the stock market on his own for quite some time. Sometimes, Marar gains, while some other time he loses while trading. But, it hasn't deterred him from trading for a simple reason that it is a kind of pastime for him.

"I know that trading in the stock market has become risky these days. Hence, I have joined an online 'Price Action' course to understand the fundamentals of trading. It gives me an RSI indicator, which I believe is the most powerful indicator for trading in the stock market," says Marar.

The current pandemic has resulted in digital adoption reaching astronomical levels and has blurred the digital divide. While this is a well-known fact, senior citizens are no exception. Major trends observed in digital adoption include – banking, payments, online shopping for essentials and medical services to name a few.

Talking to Bizz Buzz, Ajay Menon-CEO-Broking & Distribution, Motilal Oswal Financial Services, said, "Within our business also we have seen a steady number of acquisitions with nearly 11 per cent of customers above 55 and 14 per cent being actively trading as well on an overall basis. Now coming to digital adoption, nearly 46 per cent of our new senior citizen acquisitions logged in to our platforms app/web in FY21 v/s 36 per cent in September 2020. On an overall basis, clients over 60 years have a penetration of 29 per cent on revenue basis with 24 per cent of clients had more than 80 per cent revenue online.

Digitisation has also broadened the outlook of customers with 28 per cent senior citizens actively invested in our algorithm based Intelligent Advisory Portfolios – a range of 100 per cent online AI enabled equity investing portfolios – an indicator for appetite of tech-based investing."

While digitisation is good, pure digitisation has its limitations as well and at MO we have been conscious of adopting a "Phygital" approach wherein we make sure our advisory is in regular touch with clients; especially during volatility and critical market days to help them make the best trades and take a balanced approach. We continue to service our customers by bringing the best of technology and advisory and help them navigate the investment world," he added. With new SEBI norms on margin which is levied on peak capital, it is better to day trade in cash market which allows you to leverage with a 15 per cent margin. Lot size in stock this profit and losses can be big. In case the senior citizens are looking at an incremental income, then they should plan their investment and/or trading accordingly. You have time at your disposal and if you choose to day trade then plan accordingly. Manage your expectations for example, if the need is an extra income of say 40,000; then don't try to make more than 2,000 a day by way of trading. "They have to work on their expectations, indulge in only limited amount of trading that can be a supplementary source of income. Suppose if there is a shortfall of Rs 2 lakh per annum, indulge in limited amount of trading only which can be a supplementary source of income," says Manish Shah, founder, niftytriggers.com. Interestingly, the retirees have taken some courses on share trading and resorting to trading on their own. Inflation on YoY is likely to get elevated. So, the retirees are likely to struggle with their day-to-day expenses. The retirees should not fall for the current market value of share prices. Because, market may be overheated at the moment, still they should avoid this situation of putting lot of money in equity.

As nobody can predict what will happen in future avoid falling for traps on social media channels of instant wealth and sure shot gains.

They can opt for debentures/ corporate bonds which are also available. Research on good companies with highly rated fixed income instruments. Data can be obtained from the NSE's debt market site. Here they can get a slightly higher rate of return, no matter if comes at a cost. Then they also need to see if the debentures they are putting their money into, are secured ones. It requires some homework before putting your money. Conservation of capital is of paramount importance. Avoid trading into speculative stocks. One should indulge in trading activities within one's reach only, advises Shah.

Which funds are doing the best for retirees?

"Well, currently Balance Advantage Funds are preferred for the retirees," says Prakash Praharaj, chief financial planner and SEBI registered investment adviser, Max Secure Financial Planners

Which funds are not able to catch their fancy?

"The large Cap Funds are not able to generate alpha and hence they have come under scrutiny," added Praharaj.