Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 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 Premjit on Jul 11, 2025Hindi

I am 82 yrs old & my wife 77 yrs old, we are having mutual funds of about 70 lakhs , SCSS OF 60 LAKHS & FD in bank of 70 LAKHS, I have to support my grand children by Ten lakhs per year. Having pension & dividends from MF of Rs 30000/- per month. Life expectancy approx 15 / 20 years or so of each, please guide

Ans: Your financial structure reflects discipline and foresight. You have built a strong support system for your later years. Supporting your grandchildren while staying financially independent is a beautiful goal. Let us design a sustainable, risk-managed, and emotionally peaceful plan for the next 15–20 years.

»Overall Financial Snapshot

– You are financially self-sufficient. That’s a rare and strong position.
– Your monthly income is Rs 30,000 from pension and MF dividends.
– Your corpus is well distributed across mutual funds, SCSS and fixed deposits.
– You support your grandchildren with Rs 10 lakhs per year.
– Your asset value is Rs 2 crores (excluding any property).
– You are not dependent on anyone for your lifestyle or medical needs.

This financial independence gives freedom, peace, and dignity in retirement.

»Annual Expense Analysis

– Grandchildren’s support is your biggest committed expense.
– Rs 10 lakhs per year equals around Rs 83,000 per month.
– Your regular lifestyle and medical costs need to be budgeted separately.
– It’s safe to assume another Rs 60,000–70,000 monthly for both of you.
– That brings total need to around Rs 1.4–1.5 lakhs monthly.
– Current income of Rs 30,000 is not enough to meet this need.
– You must draw the balance from your investments.

Let’s build a plan that delivers this cash flow sustainably for 20 years.

»Cash Flow Planning for 20 Years

– Your total need is around Rs 1.5 lakhs monthly.
– Rs 30,000 comes from pension and dividend.
– Balance Rs 1.2 lakhs must come from investments.
– Annual investment withdrawal need is about Rs 14–15 lakhs.
– Your current corpus is around Rs 2 crores.
– This can support you for 20+ years with good planning.

But care must be taken to manage liquidity and reduce risk.

»Investment Allocation Review

– Mutual Funds – Rs 70 lakhs
– SCSS – Rs 60 lakhs
– Bank FD – Rs 70 lakhs

You have rightly spread investments across growth, income, and safety.
Still, a few refinements will make your plan stronger.

»Role of SCSS in Your Plan

– SCSS is senior-friendly and offers guaranteed quarterly interest.
– Current interest is around 8.2% yearly.
– Rs 60 lakhs in SCSS gives around Rs 4.9 lakhs annually.
– That’s around Rs 41,000 monthly.
– This interest must be used to meet monthly cash needs.
– It will reduce withdrawal pressure on mutual funds.

Use SCSS income for daily expenses and grandchildren’s support.

»Role of Bank Fixed Deposits

– Rs 70 lakhs in FD ensures high liquidity and emergency safety.
– Keep Rs 15–20 lakhs in short-term FDs with monthly payout.
– Use balance Rs 50–55 lakhs in laddered FDs with 1–5 year maturity.
– Renew them based on need and interest rate cycles.
– FD interest should also be directed to your bank account.

FDs are your emergency plus income-support vehicle.

»Role of Mutual Funds

– Rs 70 lakhs in mutual funds can be used for inflation protection.
– You don’t need risky growth now.
– Avoid small-cap or thematic funds in this stage of life.
– Stick to balanced advantage and large-cap oriented funds.
– Use monthly SWP of around Rs 40,000 from mutual funds.
– Do not rely on direct equity or direct funds now.
– Direct funds don’t offer handholding or emotional support.
– Regular funds with a Certified Financial Planner are more suitable.
– They offer personalised review, rebalancing, and peace of mind.

Also, avoid index funds now. They are passive and less flexible.
Actively managed mutual funds handle risk better in volatile years.

»Why Index Funds Are Not Suitable

– Index funds cannot protect you during market crashes.
– They follow the market blindly with no downside protection.
– You need safety, not blind exposure to stock market risk.
– Active funds offer selective investment, sector allocation, and risk filters.
– Fund managers take calls to move to cash or safer assets.
– That makes them better for retirement income planning.

For you, safety is more important than extra 1% return.

»Support to Grandchildren

– Rs 10 lakhs yearly is a loving and noble commitment.
– Tag this amount as a separate withdrawal goal.
– Use SCSS interest and part of FD interest for this.
– Avoid redeeming mutual funds for this, unless necessary.
– Let MF corpus grow for future medical or homecare needs.
– If you want to give lump-sum gifts, do it through FDs.
– Also ensure proper gift documentation to avoid legal hassles later.

Maintain emotional support, but avoid financial stress from over-commitment.

»Medical Safety and Health Expenses

– Medical needs may rise in the next 5–10 years.
– Keep a health insurance plan active if available.
– If not, maintain Rs 20–25 lakhs in liquid FD for medical use.
– Use this only for hospitalisation or care needs.
– Avoid using medical corpus for gifting or family help.
– Also plan for home nursing, physiotherapy, or assisted care later.

Medical costs must not disturb your core lifestyle cash flow.

»Taxation Planning of Withdrawals

– SCSS interest is fully taxable as per your income slab.
– FD interest is also fully taxable.
– Mutual fund redemptions have specific rules.
– Equity MF: LTCG above Rs 1.25 lakh is taxed at 12.5%.
– STCG (below 1 year) taxed at 20%.
– Debt MF gains are taxed as per slab.
– Withdraw from equity MF after 1 year of holding.
– Spread redemptions across years to reduce tax impact.

Stay tax-aware, not tax-paranoid. Prioritise peace over tax savings.

»Estate Planning and Documentation

– Ensure both of you have a Will in place.
– Clearly mention names of grandchildren or heirs.
– Register the Will to avoid future disputes.
– Nominate all investment accounts properly.
– Also mention instructions for MF, SCSS, FDs, pension, and bank accounts.
– You may assign a trusted executor to manage post-life transfers.

Proper documentation ensures your love and wealth reach the right hands.

»Simplify Access and Management

– Keep joint names in all bank and FD accounts.
– Make MF folios joint or add nominee.
– Maintain a printed summary of assets and accounts.
– Share it with your spouse and one trusted family member.
– Keep passwords, locker keys, and documents in one place.
– Reduce number of folios and schemes for ease.

Financial simplicity brings emotional peace.

»Monitoring and Review Plan

– Review income and expenses once every 6 months.
– Track if SCSS or FD maturity is due soon.
– Reinvest based on interest rate movement.
– Monitor mutual fund performance every year.
– If any fund underperforms for 3 years, replace it.
– Work with a Certified Financial Planner for regular check-ups.

Planning is not one-time. Keep it alive with periodic checks.

»Gifting vs Legacy Planning

– Regular gifting is good, but limit to annual affordability.
– Don’t stretch yourself emotionally or financially.
– Also keep aside a legacy fund for post-life wishes.
– This can be in the form of FD or mutual fund corpus.
– Communicate your legacy wishes with children or grandchildren.

Balance joy of giving with long-term sustainability.

»Cash Reserve for Home Support

– Set aside Rs 10–15 lakhs for future in-home help or attendant.
– This may become necessary if mobility reduces.
– You may use FD interest or capital for this need.
– Keep it separate from regular monthly expense planning.

Planning ahead makes ageing more comfortable and less stressful.

»Finally

– You have created a wise and thoughtful financial system.
– Just a few adjustments will make it more predictable and low-stress.
– SCSS and FD will cover most of your income need.
– Mutual funds will give inflation protection and backup support.
– Withdraw gradually and thoughtfully. Don’t rush redemptions.
– Gift within comfort. Keep your own security first.
– Do not shift to direct or index funds at this stage.
– Use regular plans via Certified Financial Planner for peace of mind.
– Keep reviewing and simplifying as age progresses.
– Your financial love will support your family even after you.

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.