Sir, I am 78 yrs. I have my present investments in FD about 60 lacs fetching around 8% p.m. I need atleast 10- 12 % return to match my budget. What or which mutual fund and scheme , I need to pursue . Pls advise me , I will be...

Sir, I am 78 yrs. I have my present investments in FD about 60 lacs fetching around 8% p.m. I need atleast 10- 12 % return to match my budget. What or which mutual fund and scheme , I need to pursue . Pls advise me , I will be thankful.

Ans: At 78, ensuring your investments provide a stable income is crucial. While FDs offer safety, they might not always provide the returns you desire, especially considering inflation and the need for higher returns to match your budgetary needs.

Considering your age and need for higher returns, you might want to consider Debt Mutual Funds or Balanced Advantage Funds. Debt Mutual Funds predominantly invest in fixed-income securities and can offer better returns than FDs with a moderate risk profile. On the other hand, Balanced Advantage Funds dynamically manage equity-debt mix based on market conditions, aiming for consistent returns.

However, Mutual Funds, even debt funds, come with some risk. They are subject to market fluctuations, and while they aim to provide better returns than FDs, they might not always guarantee fixed returns.

Given your situation, consulting with a Certified Financial Planner would be highly beneficial. They can assess your risk tolerance, financial needs, and recommend a suitable investment strategy tailored to your requirements.

Remember, while aiming for higher returns, it's also essential to maintain a balance between risk and returns, ensuring your investments align with your financial goals and peace of mind in retirement.

Ans: Understanding Your Goals and Current Position

Your age is 45 now.

You need Rs 15 lakh after 5 years.

You need Rs 70 lakh after 10 years.

You need Rs 50 lakh after 15 years.

You need Rs 1.5 crore after 20 years.

This is a well-defined and clear set of goals.
You already have some investments in place.
Let us first analyse your current financial strength.

Current Investments Overview

Rs 10 lakh in mutual funds (assume equity-oriented).

Rs 9 lakh in NPS (for retirement after 60).

Rs 7 lakh in PPF (good for long-term and tax-free).

Rs 5 lakh in Sukanya (goal likely for daughter).

Rs 2 lakh in FD (low returns and taxable).

SIP in mutual fund: Rs 38,000 monthly.

SIP in Tata I systematic ULIP: Rs 15,000 monthly.

RD of Rs 10,000 monthly.

You can now add Rs 20,000 more monthly.

These are all very good habits.
Now, we need to align these properly to your life goals.

Assessing the ULIP Investment

Tata I SIP systematic plan is a ULIP.
ULIPs combine investment and insurance.
But they have high charges and low flexibility.

You should ask these questions now:

What is your fund value today?

What is the surrender value?

What is the lock-in left?

Is return matching equity mutual funds?

If your lock-in is over, please consider surrendering it.
Reinvest the maturity value into mutual funds.
ULIP return is usually less than good mutual funds.
ULIPs also have poor liquidity.

A Certified Financial Planner can assist you in fund shift.

Goal-Wise Investment Strategy

You have four major goals.
We will break your corpus and future SIPs goal-wise.

Goal 1: Rs 15 lakh in 5 years

This is a short-term goal.

Do not invest in full equity.

Use debt-oriented hybrid funds.

Use short-duration debt funds.

Start systematic transfer in 4th year.

Avoid high-risk small-cap funds.

This goal needs safety over growth.

Allocate Rs 4 lakh from existing mutual fund corpus.
Use Rs 7,000 from your current SIP towards this goal.

Goal 2: Rs 70 lakh in 10 years

Medium to long-term goal.

Equity allocation can be higher here.

Use flexi-cap and large-cap active mutual funds.

Choose funds through a Certified Financial Planner.

Avoid index funds for this goal.

Index funds may not beat inflation.

They do not protect in falling markets.

Allocate Rs 4 lakh from your existing mutual fund corpus.
Invest Rs 16,000 from your current SIP for this goal.
Add Rs 6,000 from new Rs 20,000 SIP capacity.

Goal 3: Rs 50 lakh in 15 years

Long-term goal.

Equity-oriented mutual funds work well here.

Choose actively managed mid-cap or focused funds.

Use SIPs and step-up every 2 years.

Let power of compounding work over time.

Add Rs 9,000 monthly from your new SIP capacity.
Allocate Rs 1.5 lakh from current mutual fund corpus.

Goal 4: Rs 1.5 crore in 20 years

This is a long-term retirement-like goal.

You have PPF and NPS already.

Continue both till maturity.

They offer safety and tax benefits.

Also add equity mutual funds for better growth.

Use balance Rs 5,000 of new SIP into diversified equity funds.
Allocate balance Rs 0.5 lakh from MF corpus here.
Also assign full maturity value of ULIP to this goal.

Sukanya Samriddhi Account

Keep this fund separate.

Use it only for daughter’s education or marriage.

Don’t link this fund to other life goals.

PPF Investment Strategy

Rs 7 lakh is already there.

Try to add Rs 1 lakh yearly till age 60.

Don’t withdraw before 15 years.

Use it for retirement corpus.

NPS Strategy

Rs 9 lakh corpus is good.

Continue till age 60.

Invest Rs 50,000 extra yearly for tax benefit.

This is locked but tax-efficient.

NPS is ideal for post-retirement security.

Recurring Deposit Review

Rs 10,000 in RD gives fixed return.

This return is taxable.

Shift to short-term debt funds for better returns.

Or assign RD value to short-term goal fund.

Fund Selection Tips

Use regular plans only.

Don’t go for direct funds.

Direct funds have no support.

Regular funds give you planner guidance.

Planner gives goal match and portfolio balancing.

Regular mutual fund via MFD + CFP gives:

Emotional coaching in volatile markets

Regular rebalancing

Tax planning support

Risk adjusted fund suggestion

Ongoing goal alignment

Disadvantages of Index Funds

Index funds are unmanaged.

They cannot protect during market crash.

No dynamic asset allocation.

No guidance support.

You miss sector shifts.

Index funds may lag active funds in India.

Better to choose actively managed equity funds.

MF Capital Gains Tax Rules (New)

LTCG above Rs 1.25 lakh taxed at 12.5%.

STCG on equity taxed at 20%.

Debt funds taxed as per income slab.

Use tax harvesting with planner to reduce tax outgo.

Investment Execution Plan

Step 1 – Fund Realignment

Check ULIP lock-in status.

If free, surrender and reinvest in equity fund.

Shift RD money into debt fund.

Keep FD for emergency buffer only.

Step 2 – Systematic Investments

Create 4 different SIPs for 4 goals.

Use mix of hybrid, flexi-cap, and mid-cap funds.

Review SIP allocation yearly with your Certified Financial Planner.

Step 3 – Tracking and Rebalancing

Review portfolio every 6 months.

Rebalance if goal off-track.

Shift money to safer funds near goal maturity.

Don’t touch long-term investments for short needs.

Step 4 – Increasing SIP Annually

Increase SIP amount every year.

Even 5% hike in SIP gives huge impact.

Use bonus or hike money.

Keep life cover and health cover intact.

Step 5 – Emergency Planning

Keep Rs 3 lakh liquid in FD or liquid fund.

Use this only during job loss or emergency.

Finally
You already have good financial habits.
Your goals are defined and time-based.
You are investing well in MF, PPF, NPS and Sukanya.
ULIP and RD need review and change.
Avoid index funds and direct funds.
They lack advice and flexibility.
Stick with regular mutual funds through Certified Financial Planner.
Map each SIP to a goal separately.
Track progress every year with your planner.
Avoid panic during market correction.
Stay invested. Stay consistent.

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