Do you have mutual fund, insurance and personal finance-related queries?
Please ask your questions HERE to rediffGURU Reetika Sharma, who has an MBA from the ICFAI, and professional certifications from the FPSB, AMFI and IRDAI.
Sunil: I am 58 years old. I am holding a PF saving of 2.5 cr, what is the best way to earn monthly income while my capital amount is protected? I wish to earn monthly amount with stress free so that it supports my family. We are family of 3 with son studying in 8th Standard. Also I have a Annuity policy from Max life which will give me a monthly income of 26000 for life.
You are getting 26k from annuity policy. Additional monthly expenses can easily be covered using your existing PF of 2.5 crores.
Can go with the below options:
1. Senior Citizen Saving Scheme (SCSS): 30 lakhs (jointly with spouse). 8.2% interest with quarterly payout.
2. FD: 50 lakhs. Emergency net.
3. Mix of hybrid and debt mutual funds using bucket strategy for remaining 1.5 crores. Can do a monthly SWP. This approach is tax efficient, preserves capital and grow that without any risk.
4. Keep 20 lakhs in equity mutual funds for your kid's higher education. This amount will grow substantially when he turns 18 and will take care of the expenses.
Do work with a professional to work out on this strategy.
Subhash: I am a sr. citizen and have 10 lakhs to invest for 5 to 7 years, where do I invest the money? I do not have any immediate liabilities to pay.
Best option for you is to open a Senior Citizen Saving Scheme (SCSS) account with 10 lakhs. This will give interest of 8.2% pa payable quarterly. Time duration -- 5 years; lock-in with 3 year extension.
Make an RD of the quarterly interest payout.
Anonymous: I am a 42 years pvt sector employee. I am currently investing in MF SIP of 50/52k per month (avg age 5 years) and accumulated MF corpus till date including a few old ones stands at 33 lakhs. NPS of 6k per month, PPF 4k per month and 25k pm in EPFO including employers share. I have an o/s home loan of 1.25 crs @ 7.10% and plan to pay it off in next 10 years. Retirement age is 58 and desired corpus by retirement should be 7-8 crores.
Please advice if I am on right track and any changes to the investment strategy required? Also i do plan to increase allocation to mf by min 15% annually till retirement age.
My term cover is 50 lakhs. Mediclaim of 20 + 20 lakhs top up and my wife has a 50 lakhs mediclaim. We don't plan any kids.
You have done great by accumulating so much at your age. This is commendable.
You want to retire after 16 years at the age of 58. Let us go through your financials in detail:
Monthly contributions in PPF, EPF and NPS - 35k - good, continue it. This entire amount is going into debt instruments and will be helpful to cover your expenses immediately after retirement.
Current HL outstanding at 1.25 cr at 7.1% is quite cheap. Do not rush into prepaying the loan. Take 10 years’ time and pay it slowly. Rather focus on increasing contributions towards MF as that will build your long term wealth.
33 lakhs MF corpus with 52k SIP at 15% annual step-up. This will generate 9 crores corpus when you turn 58 (more than your target). Stay focussed and make sure that you have chosen right funds wrt your goals. Investing on random tips and only direct index funds is not sufficient.
Term cover of 50 lakhs can be increased to 1 cr.
Health: Take a super top up of 50 lakhs considering high medical costs and your increasing age.
Overall things are going good. You just need to maintain the discipline.
Ashraf: I want to invest in mutual fund or gold ETF which is better? If mutual fund which are 2 good mutual funds?
Both are equally good. Can invest 30% in gold etf and 70% in mutual funds. But make sure investments do not depend upon only better part. Invest wrt your individual profile. Work with a professional and focus on wealth building.
Anonymous: I have taken early retirement from my active job of 10hrs, i have 48L of Mutual Fund 54L of Shares 30L FD and 24L LIC maturity in 2031, i have 1 daughter doing BTech last year and 1 son in 6 std now. Is above investment sufficient for me for next 20 yrs
i will withdraw 12 L yearly as SWP after 10 yrs from now & i will work as freelancer for my monthly expenses of 60K & 40K SIP till next 10 years. Please advise is the corpus fine.
Congratulations on your early retirement. It is really good that you'll do freelance work for next 10 years to cover your monthly expenses of 60,000 rupees.
- If you will continue the SIP of 40k for upcoming 10 years, your total mutual fund corpus would become 2 crores.
- Current stock portfolio needs to be safely moved to mutual funds as direct stock investment is very risky. It needs proper research and entry exit and any mistake can cause a huge drop in the numbers. Kindly consider reallocating 50 lakhs into hybrid mutual funds.
- LIC maturities should be parked in a mix of debt and hybrid funds so as to create proper diversification wrt risk.
- Properties are good investment, can hold.
These can cover your expenses for next 20 years. Make sure to follow the right investment strategy.
However, to cover cost of higher education of your son, consider investing more wrt to that particular goal.
Can consider consulting a professional Certified Financial Planner who can guide you with exact funds to invest in keeping in mind your age, requirements, financial goals and risk profile. A CFP periodically reviews your portfolio and suggest any amendments to be made, if required.
- You can ask rediffGURU Reetika Sharma your questions HERE
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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
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