57-Year-Old Seeks Safe Investment Strategies for 35K Monthly Income

Ans: First of all, it is commendable that you have accumulated Rs 50 lakh as savings. Planning for a monthly income of Rs 35,000 without touching the principal requires careful thought. Since you are nearing retirement, it is essential to consider both safety and returns.

You have mentioned that you are not familiar with shares and SIPs. Moreover, you prefer traditional investments like gold. Let’s explore some safe and traditional investment options that can help you achieve your goal of regular income without reducing your principal.

Three main aspects need attention here:

Preservation of principal
Generating regular income
Minimizing risk while maximizing returns
Safe Investment Options for Generating Rs 35,000 Monthly Income
1. Senior Citizen Savings Schemes (SCSS)
SCSS is a secure option backed by the Government of India. It offers decent returns and is specifically designed for senior citizens. The interest is paid quarterly, making it an excellent source of regular income.

You can invest a portion of your Rs 50 lakh in this scheme to get quarterly payouts. This will help you generate steady income and keep your capital safe.

2. Post Office Monthly Income Scheme (POMIS)
POMIS is another government-backed scheme that gives you a fixed monthly income. It has a lock-in period of five years, and it’s quite a popular option for retirees. Though the returns may not be very high, the scheme is considered safe.

You can invest a part of your money in this scheme to get a monthly payout, thus supporting your goal of earning Rs 35,000 per month.

3. Debt Mutual Funds (Actively Managed)
Debt mutual funds invest in low-risk bonds and securities. They are safer compared to equity mutual funds but provide better returns than fixed deposits. A Certified Financial Planner (CFP) can help you choose actively managed funds. These funds are managed by experts who actively monitor and adjust the portfolio to maximize returns and minimize risk.

While direct funds might seem tempting because of lower costs, regular funds that go through a mutual fund distributor and a CFP offer guidance. This can be critical for maintaining stable returns without taking unnecessary risks.

4. Gold
Since you prefer investing in gold, you may want to consider a combination of physical gold and gold bonds. Sovereign Gold Bonds (SGBs) are government-backed and provide an interest of around 2.5% per annum, along with price appreciation.

The physical gold you already have may appreciate over time, but it doesn’t generate any income. By investing in SGBs, you’ll get both price appreciation and regular interest income. It’s a great way to maintain your love for gold while ensuring regular returns.

5. Fixed Deposits (FDs)
Though FDs do not offer the highest returns, they are one of the safest options. Some banks offer higher interest rates for senior citizens, which you can take advantage of. A well-diversified strategy would involve putting some of your money into FDs, which will give you a stable income.

However, try not to rely solely on FDs, as inflation could erode your purchasing power over time. Combining FDs with other investment options will help in maintaining both safety and returns.

Ensuring Liquidity
It’s also important to ensure that part of your investments are liquid in case of emergencies. While SCSS and POMIS are safe, they come with lock-in periods. So, keep some money in liquid mutual funds or a savings account for emergencies.

Liquid mutual funds can give slightly better returns than savings accounts. You can withdraw them whenever needed, ensuring that you’re financially prepared for any unforeseen expenses.

Inflation-Protected Strategies
One major challenge is ensuring your income keeps pace with inflation. Traditional investments, while safe, might not always beat inflation. Therefore, you can consider including a small portion of your portfolio in assets that have the potential for growth, like equity mutual funds, with the help of a Certified Financial Planner.

Actively managed equity mutual funds, selected and monitored by an expert, can provide inflation-beating returns over the long term. Though they come with risks, a small allocation to these funds can ensure that your purchasing power does not diminish over time.

Tax Efficiency
To maximize your post-tax income, you need to consider the tax implications of your investments. Interest from SCSS, POMIS, and FDs is fully taxable. On the other hand, long-term capital gains from debt mutual funds enjoy lower taxation.

By carefully selecting tax-efficient options, you can reduce your tax outgo and increase your effective income. A well-thought-out strategy can ensure you meet your goal of Rs 35,000 per month without undue tax burden.

Final Insights
To summarize, here’s a recommended portfolio to help you achieve a monthly income of Rs 35,000:

SCSS: A large portion can be invested here for regular and safe income.
POMIS: Another safe option that pays monthly income.
Debt Mutual Funds (Actively Managed): For stable and better returns with the help of a CFP.
Sovereign Gold Bonds: For interest income along with price appreciation in gold.
Fixed Deposits: For a safe and stable income, but ensure it’s not the only option.
Liquid Mutual Funds: To maintain liquidity for emergencies.
Small Equity Exposure (Actively Managed): For inflation-beating returns over the long term.
The key is to balance safety with income generation. By diversifying across these different options, you will minimize risks and ensure that your principal remains intact. This strategy will provide you with the peace of mind you need during your retirement years, knowing that you have both a regular income and a secure financial future.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment