My father is 73 years old, he has some lumpsum amount as his savings, would like to invest somewhere were he can get some decent income without affecting his principal amount. Can you suggest where to invest

Ans: Considering age, requirement and safety of principal. Investing in below options will be prudent. Choose the product which suits your requirements best.

• Post Office Monthly Income Scheme (POMIS): Up to Rs. 9 lakhs investment only, currently 7.4% per annum (interest paid monthly) and the principal will be returned at maturity.

• Senior Citizen Savings Scheme (SCSS): Maximum up to Rs. 30 lakhs investment, currently offering 8.2% per annum (interest paid quarterly). Completely secure, 5-year lock-in and can be extended indefinitely in blocks of three years each.

• Debt Mutual Funds with Systematic Withdrawal Plan (SWP): Invest a portion (60-70%) in stable debt funds for regular income, remaining in growth funds for capital protection. SWP withdraws a fixed amount monthly which can be altered as per the requirements. The monthly withdrawal amount should be less than the expected returns of funds to ensure principal doesn't deplete in long term horizon.

Ans: Your aspiration for a pension scheme is commendable, and it's wise to plan for your future financial security at an early age. Considering your age and investment horizon of 12 years, let's explore suitable options to achieve your goal.

Given your preference for a monthly pension of Rs. 20,000, you would need to accumulate a significant corpus over the investment period to ensure a sustainable income stream post-retirement.

While traditional pension plans and annuities offer guaranteed income, they may not provide optimal returns considering inflation and taxation. Additionally, they often lack flexibility and liquidity.

Instead, you may consider investing in a combination of mutual funds and other growth-oriented assets to build a substantial corpus over time. Equity-oriented mutual funds have historically delivered higher returns compared to traditional investment avenues, making them suitable for long-term wealth creation.

You can allocate a portion of your monthly investment towards equity mutual funds, which offer the potential for capital appreciation over the long term. To mitigate risk, diversify your portfolio across large-cap, mid-cap, and multi-cap funds based on your risk tolerance and investment objectives.

Simultaneously, consider investing in debt mutual funds or fixed-income instruments to provide stability and generate regular income post-retirement. These investments can serve as a source of passive income to supplement your pension.

Moreover, systematic investment planning (SIP) allows you to invest a fixed amount regularly, ensuring discipline and consistency in your investment approach. By staying invested over the long term and leveraging the power of compounding, you can potentially achieve your desired pension goal.

However, it's crucial to periodically review your investment strategy and make necessary adjustments based on changing market conditions and your evolving financial goals.

In conclusion, by adopting a diversified investment approach tailored to your risk profile and investment horizon, you can work towards realizing your goal of a monthly pension of Rs. 20,000. Consider consulting with a Certified Financial Planner for personalized advice and guidance to optimize your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Current Financial Situation
Your dad has Rs. 60 lakhs for investment.
He has already invested Rs. 45 lakhs in secure funds (MIS, LIC, SCSS).
Your goal is to grow this Rs. 60 lakhs to Rs. 5 crores in 10-15 years. This requires a focused and strategic investment approach.

Investment Strategy
Diversification
Diversify investments across different asset classes.
Balance between risk and return.
Avoid putting all money in one type of investment.
Equity Mutual Funds
Invest a significant portion in equity mutual funds.
High potential for growth over long term.
Actively managed funds preferred over index funds.
Benefits of Actively Managed Funds
Professional management.
Potential for higher returns.
Better risk management.
Systematic Investment Plan (SIP)
Start SIPs in equity mutual funds.
Regular and disciplined investment.
Helps in rupee cost averaging.
Lump Sum Investments
Invest a portion of Rs. 60 lakhs in lump sum.
Prefer equity and hybrid funds.
Monitor and adjust portfolio periodically.
Hybrid Mutual Funds
Invest in hybrid (balanced) funds.
Combination of equity and debt.
Provides stability and growth.
Debt Mutual Funds
Allocate a portion to debt mutual funds.
Lower risk compared to equity.
Provides steady income and stability.
Portfolio Allocation
Suggested Allocation
60% in equity mutual funds.
20% in hybrid mutual funds.
20% in debt mutual funds.
Regular Monitoring
Regularly review and rebalance portfolio.
Ensure it aligns with financial goals.
Adjust based on market conditions.
Avoid Direct Funds
Direct funds require more involvement.
Regular funds offer professional management.
Easier to manage with a Certified Financial Planner.
Avoid Index Funds
Index funds track the market.
Lower potential for high returns.
Actively managed funds can outperform.
Risk Management
Diversification
Spread investments across multiple funds.
Reduce risk by not relying on a single fund.
Professional Guidance
Consult a Certified Financial Planner.
Get tailored advice for your situation.
Regular reviews and updates.
Emergency Fund
Keep an emergency fund.
At least 6 months of expenses.
Use liquid funds or savings account.
Insurance
Ensure adequate health and life insurance.
Cover medical emergencies.
Avoid dipping into investments.
Final Insights
Long-Term Focus
Focus on long-term growth.
Avoid short-term market fluctuations.
Regular monitoring and adjustments.
Passive Income
Generate passive income through dividends and SWP.
Maintain a balance between growth and stability.
Stay Informed
Stay updated with market trends.
Regularly review financial plans.
Adjust as needed.
Professional Support
A Certified Financial Planner can guide you.
Tailored strategies for your goals.
Regular reviews and advice.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

You may initiate a monthly sip of 4 K for him.

After 7 years he may expect to receive a corpus of 5.5 L.

If you use this corpus to make an FD with a big psu bank, he may expect monthly payment of 3.2 K considering 7% ROI.

A modest return of 13% is considered from pure equity mutual funds investment.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.