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Ramalingam Kalirajan |9255 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 05, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Murthhy on Jun 02, 2025

Sir, I am 50 and getting 25 lacs as SB from LIC. What best option i have which can give me good but secured returns in 10 years

Ans: At age 50, receiving a lump sum of Rs 25 lakhs from an LIC settlement bonus is a key financial milestone. The next step is to protect and grow this money smartly over the next 10 years.

You have rightly mentioned that you want good but secured returns. So, this financial plan will focus on capital protection, moderate returns, low tax impact, and simplicity in execution.

Let’s analyse your situation and create a 360-degree investment plan, step by step.

Understanding Your Financial Position
You are 50 years old.

You have Rs 25 lakhs to invest.

Your investment time horizon is 10 years.

Your focus is on secured returns, not aggressive growth.

This could be for retirement, child’s education, marriage, or legacy.

You also seem concerned about risk and safety, which is valid at this age.

Key Objectives To Be Achieved
Avoid capital loss at all costs.

Earn better returns than savings or fixed deposits.

Protect the investment from high tax outgo.

Keep liquidity when needed.

Keep portfolio simple and manageable.

Assessing Suitability of Investment Options
Let’s evaluate the options that are commonly considered and what really works.

Fixed Deposits: Familiar but Limited
Capital safety is high.

Interest is fully taxable as per your tax slab.

Returns are around 6%–7%.

No inflation protection.

Not ideal for 10-year horizon.

Post Office and Government Schemes
Some schemes offer better interest than banks.

But most have long lock-ins or limited liquidity.

Some are not suitable beyond age 60.

Senior Citizen Savings Scheme (after age 60) will become useful later.

Not fully flexible.

Direct Mutual Funds: Not the Right Path
Many investors prefer direct funds to save on commission.

But they miss personalised service and regular review.

Without professional support, mistakes happen in fund selection.

Lack of rebalancing leads to poor performance.

Regular plans through a CFP-backed Mutual Fund Distributor offer much-needed guidance and behavioural discipline.

Monitoring becomes easy.

So, avoid direct funds. Use regular funds with a certified financial planner.

Index Funds: Not Suitable for You
Index funds are passive funds.

They do not protect in falling markets.

There is no fund manager to handle risk.

Your time horizon is just 10 years, not very long.

Actively managed funds aim to beat index returns.

Especially useful in volatile markets and uncertain times.

Avoid index funds in your case.

ULIPs or Endowment Plans: Already Received One, Don’t Go Again
You’ve got Rs 25 lakhs from LIC, likely from an endowment or money-back policy.

These give poor returns, between 4%–5%.

Don’t reinvest in such traditional products.

Surrender any such leftover LIC policies if not useful.

Reinvest proceeds in mutual funds for better growth.

Ideal 360-Degree Investment Plan for You
Now let’s see a secure, goal-oriented, and tax-efficient way to grow your Rs 25 lakhs in the next 10 years.

Split your investment in parts based on goal and timeline.

1. Emergency Reserve – Rs 2.5 lakhs
Keep it in a savings-linked sweep-in account or ultra-short debt fund.

Use it only for medical, family, or life emergencies.

Helps you avoid breaking long-term plans when sudden expenses arise.

Ensures peace of mind.

2. Short-Term Needs (3–5 years) – Rs 5 lakhs
Invest this in conservative hybrid funds or short-duration debt funds.

These provide better returns than FDs.

Low risk and low volatility.

Suitable for upcoming goals like child’s college fee or planned house repairs.

Avoid equity exposure here.

Gains taxed as per your slab since it's debt-based.

3. Long-Term Core Investment (10 years) – Rs 17.5 lakhs
This portion can grow your wealth safely and meaningfully.

Invest through regular mutual funds with guidance from a CFP-based MFD.

Choose a mix of balanced advantage funds, large-cap equity funds, and aggressive hybrid funds.

These have controlled risk and decent upside.

Suitable for your age and investment horizon.

Choose funds with good track record, not new launches.

Don’t chase highest return. Focus on risk-adjusted stable growth.

Tax Efficiency Planning
Tax impact can eat up returns if not managed well.

Use mutual funds over FDs to benefit from capital gains tax rules.

Equity mutual funds held for over 1 year are taxed at 12.5% if gains exceed Rs 1.25 lakh.

Short-term gains are taxed at 20%.

This is still better than 30% slab in most cases.

Debt mutual funds are taxed as per slab, but with careful planning, you can avoid yearly withdrawals and reduce tax drag.

Important Investment Practices
Don’t just invest and forget. Follow structured habits.

Review portfolio performance every 6–12 months with your certified planner.

Rebalance based on market and fund performance.

Don’t switch funds based on short-term returns.

Avoid agents who push only insurance products.

Focus on goal-based planning, not random investing.

Be disciplined in SIPs if you decide to do staggered investment.

Should You Consider Monthly Income?
If you want regular income from this corpus:

Start Systematic Withdrawal Plan (SWP) from hybrid funds after 1–2 years.

SWP is more tax-efficient than bank interest.

Start with 6% withdrawal annually to keep principal safe.

Gradually increase after 5 years if returns support it.

What You Must Avoid
Let’s also identify what you must strictly stay away from.

Do not reinvest in another LIC traditional or ULIP plan.

Do not invest in chit funds or unregulated NBFC schemes.

Do not take advice from unqualified agents or friends.

Avoid risky stocks or trading apps.

Avoid direct funds without CFP guidance.

Don’t use this lump sum for luxury purchases.

Don’t invest the full Rs 25 lakhs at one go in equity funds.

Customisation Based on Your Life Stage
You are entering pre-retirement stage.

So planning must ensure safety, income, and liquidity.

If you have dependents, ensure you have health and life insurance.

If your retirement is within 10–12 years, this Rs 25 lakhs can become a retirement income source.

Consider increasing your investment if other income sources are weak.

Use this plan as a base for all your future financial decisions.

Finally
Rs 25 lakhs is a strong starting point for a 10-year plan.

Don’t let it lie idle in bank account.

Split it across short-term, medium-term, and long-term goals.

Focus on capital safety with moderate growth.

Use mutual funds through a regular route with a Certified Financial Planner.

Avoid traditional products, direct funds, and index funds.

Plan reviews every year to stay on track.

Ensure all investments align with your personal goals, not just returns.

Proper structure and guidance will ensure your peace of mind and financial confidence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.