Dear Mr. Ramalingam,
I have been reading your column regularly and feel you are giving great advice. Would like your advice and help in seeing what would be my income going forward per month and will that be adequate and how to supplement it.
I am aged 62 in kerala. My wife is 58 not working and unmarried daughter, independently earning, who we hope will get married this year.
Savings:
1.2 cr in Fd’s in banks and Post office
66 lakhs in PPF (I have been extending it by 5 years each time)
14 lakhs in NPS
1 lakhs in EPF last employment was in Jun 2024
44 lakhs in shares (portfolio bought many years back based on friends recommendation but only few stocks are doing ok rest is just sitting there)
90 lakhs in Mutual funds with several mutual funds (all in growth plans)
86 lakhs at cost price for A flat where I am staying and empty plot (both fully paid for)
Income currently is from:
LIC Jeevan Suraksha Plan, receiving Rs. 7,021 per month till death
LIC Pradhan Mantri Vaya Vandana Yojana -annual receipt of - Rs. 77,979 (till mar 2032) when I get lumpsum back of app Rs. 10 lakhs
New Jeevan Shanti Plan – fully paid up but receipts to commence from Mar 2027 monthly Rs. 36,450.00/- till death of self and wife
Interest income from few of the FD or break fd principal when required.
Little income from dividends
Expense:
Tata ULIP 20 yr plan premium of 1 lakhs till last payment in 2026 (2 payments left), mature in 2027, current value is 57 lakhs.
TATA AIA Fortune Guarantee Pension – annual payment of Rs. 3,06,000/ till last payment in 2026 (2 payments left). 1,07,000 per year from Apr 2028 for life of both of us and return of premium at end of both lives.
Aditya Birla Guaranteed Milestone Plan –Paid Rs. 1,02,500 for 5 year last payment this year. Will receive Rs.8,94,000/ in Dec 2031 has life cover of Rs. 15 lakhs (Worst plan I was conned into taking)
Family Health insurance of 8 lakhs cover plus a super top up floater of 5 lakhs, covering all 3 of us approximately 45,000 for both policies
12 year old car with 4,000 insurance policy
Other expenses approximately 30,000 per month for food etc.
Should I change any of my investment etc to get a better income to meet future needs
Thanks
Ans: You have diligently built a robust and diversified portfolio. It includes fixed deposits, mutual funds, real estate, and insurance plans. You also have various annuity and pension products. Your current financial situation showcases foresight and discipline.
However, to ensure your monthly income meets your needs and grows with inflation, some restructuring is necessary. Let’s evaluate your assets and income streams in detail and suggest ways to optimise them.
Existing Income Sources and Expenses
Current Income
LIC Jeevan Suraksha Plan: Rs. 7,021 per month (lifetime income).
LIC Pradhan Mantri Vaya Vandana Yojana (PMVVY): Annual income of Rs. 77,979 till 2032.
New Jeevan Shanti Plan: Monthly income of Rs. 36,450 from 2027 (lifetime for self and wife).
Interest Income: From fixed deposits and dividends from shares.
Current Expenses
Household expenses: Rs. 30,000 per month.
Insurance premiums: Rs. 3,51,000 annually until 2026.
Health insurance: Rs. 45,000 per year.
Asset Analysis
Fixed Deposits
Current Value: Rs. 1.2 crore.
Analysis: While secure, FD returns are low and may not keep pace with inflation. Only retain a portion for emergencies.
Public Provident Fund (PPF)
Current Value: Rs. 66 lakh.
Analysis: PPF offers tax-free and risk-free returns. Continue extending it as a safe long-term investment.
National Pension Scheme (NPS)
Current Value: Rs. 14 lakh.
Analysis: NPS has market exposure, offering potential growth. Partial withdrawal for reinvestment can be considered post-retirement.
Employee Provident Fund (EPF)
Current Value: Rs. 1 lakh.
Analysis: Withdraw and reinvest for higher returns.
Shares Portfolio
Current Value: Rs. 44 lakh.
Analysis: A few stocks are performing, while others are stagnant. Retain fundamentally strong stocks. Sell non-performing ones and reinvest proceeds.
Mutual Funds
Current Value: Rs. 90 lakh.
Analysis: Growth plans are suitable for long-term wealth creation. However, evaluate and streamline the portfolio with the help of a Certified Financial Planner.
Real Estate
Flat: Rs. 86 lakh (self-occupied).
Plot: Value not mentioned.
Analysis: These assets provide stability but do not generate regular income. Retain them as non-liquid investments.
Insurance Plans
TATA ULIP: Current value of Rs. 57 lakh, matures in 2027.
Recommendation: Surrender post-2026 and reinvest in mutual funds for better returns.
TATA AIA Fortune Guarantee Pension: Annual payout of Rs. 1,07,000 from 2028.
Recommendation: Retain as a fixed income source.
Aditya Birla Guaranteed Milestone Plan: Payout of Rs. 8.94 lakh in 2031.
Recommendation: Retain until maturity. Avoid similar plans in future.
Recommendations to Enhance Income
1. Restructure Fixed Deposits
Retain Rs. 30 lakh as emergency funds in liquid FDs.
Reallocate Rs. 90 lakh into debt mutual funds for better post-tax returns. Choose funds with low risk and stable performance.
2. Optimise Shares Portfolio
Retain strong-performing stocks. These can provide growth over the long term.
Liquidate underperforming stocks and reinvest proceeds into equity mutual funds. Select funds aligned with your risk tolerance.
3. Streamline Mutual Funds Portfolio
Review your existing funds to avoid duplication and underperformance.
Retain well-performing funds and shift others to actively managed diversified funds.
Opt for regular funds through a Certified Financial Planner for professional advice and monitoring.
4. PPF and NPS
Continue extending PPF for tax-free returns.
Do not withdraw from NPS until it’s mandated. Allocate the lumpsum received wisely at maturity.
5. Insurance Plan Adjustments
Allow the TATA ULIP to mature and surrender it in 2027.
Retain the TATA AIA and Aditya Birla plans until maturity as fixed income sources.
Avoid high-premium insurance plans in future.
6. Increase Monthly Income
From 2027 onwards, New Jeevan Shanti and other payouts will provide substantial monthly income.
Until then, use dividends, interest from debt mutual funds, and systematic withdrawals from mutual funds for supplementary income.
7. Plan for Inflation
Maintain a mix of equity and debt investments to beat inflation.
Ensure equity exposure is at least 40% of your portfolio for long-term growth.
8. Health Insurance Adequacy
Current health insurance of Rs. 8 lakh with a Rs. 5 lakh super top-up is reasonable.
Review coverage every 2-3 years and increase if necessary.
Final Insights
Your financial portfolio is solid and well-diversified. With minor adjustments, it can provide inflation-adjusted income. Focus on reallocating underperforming assets and streamlining investments. Regular reviews will ensure your wealth grows while meeting your needs.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Satyam on Dec 13, 2024Hindi
