Should I change my investment strategy after retirement?

Ans: At 50, your priorities include securing retirement income, meeting your children’s goals, and growing your wealth. Here’s a detailed plan to achieve these goals while maintaining financial stability and peace of mind.

Current Financial Strengths
Diversified Asset Base
Your portfolio includes real estate, equity, mutual funds, and fixed deposits.
Assets like AIF, PPF, and life insurance offer additional diversification.
Stable Rental Income
Rs 30,000 monthly rental income provides a consistent cash flow.
Comprehensive Health and Life Cover
Mediclaim of Rs 50 lakh ensures healthcare expenses are well-covered.
Life insurance of Rs 2 crore protects your family’s financial future.
Areas for Improvement
Overexposure to Real Estate
A significant portion of your wealth is locked in illiquid assets like real estate.
Rental income may not grow in line with inflation.
Insufficient Liquidity
While you have a large asset base, liquid cash for immediate needs seems limited.
Need for Inflation-Adjusted Income
With retirement ahead, ensuring inflation-adjusted income is critical.
Recommendations for Portfolio Growth
Consolidate Real Estate Holdings
Consider selling the second house after completion to unlock liquidity.
Redeploy proceeds into financial instruments for better returns and liquidity.
Increase Exposure to Mutual Funds
Allocate funds from real estate or AIF into actively managed equity funds.
Focus on large-cap and balanced advantage funds for stable, long-term growth.
Strengthen Debt Portfolio
Increase allocation to debt mutual funds for stable returns and capital safety.
Ensure liquidity through short-term debt funds or fixed-income instruments.
Planning for Children’s Goals
Higher Education
Use proceeds from fixed deposits and PPF for education expenses.
These are low-risk instruments suitable for short- to medium-term needs.
Marriage Expenses
Start a targeted investment plan for marriages using balanced advantage funds.
Gradually move these funds to safer options as the events near.
Securing Regular Retirement Income
Systematic Withdrawal Plan (SWP)
Set up SWPs from mutual fund investments for steady monthly income.
This provides tax-efficient cash flow while preserving capital.
Rental Income
Retain rental income as part of your overall income strategy.
Consider enhancing property value to increase rental yield.
PPF and FDs
Use PPF maturity and FD interest for emergency funds or specific short-term needs.
Addressing Tax Efficiency
Equity Mutual Funds
Long-term capital gains (LTCG) above Rs 1.25 lakh will be taxed at 12.5%.
Systematic withdrawals from mutual funds should consider tax implications.
Debt Mutual Funds
Gains from debt funds will be taxed as per your income tax slab.
Insurance and Contingency Planning
Maintain Adequate Health Cover
Rs 50 lakh mediclaim is sufficient for now.
Reassess based on inflation in healthcare costs.
Life Insurance Review
Your life cover seems adequate for liabilities.
Ensure policies remain active until critical liabilities are settled.
Optimising Asset Allocation
Suggested Allocation Strategy
Equity Funds: 40% of the portfolio for long-term growth.
Debt Instruments: 40% for stability and regular income.
Liquid Funds: 10% for emergencies.
Other Investments: 10% in alternative assets like AIF or gold.
Periodic Review
Review your portfolio annually with a Certified Financial Planner.
Adjust allocation as per changing market conditions and personal needs.
Final Insights
Your financial situation is strong and diversified. Focus on enhancing liquidity, reducing real estate exposure, and optimising your asset allocation. A disciplined and well-planned strategy will ensure a secure and comfortable retirement while meeting your family’s needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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