I took VRS from SBI in 2023 Due to some personal reasons, I have no loans now , drawing 54000/-pension and I have 40lakhs in FD , and I have RD of 15k monthly from my pension. Is there any option of getting another 50kmonthly if I invest my 40 lakhs
Ans: You have taken thoughtful steps so far. A stable pension, no loan burden, and Rs. 40 lakhs in fixed deposits give a strong base. Also, your Rs. 15,000 recurring deposit shows continued financial discipline.
You wish to generate Rs. 50,000 more per month. Let us evaluate this from all angles, giving you a complete and professional perspective.
Below is a detailed analysis and action plan.
Present Financial Position – A Quick Snapshot
Pension of Rs. 54,000 per month ensures stable monthly income.
No loan burden gives full flexibility for future planning.
Rs. 40 lakhs in fixed deposits is your main investment pool.
Rs. 15,000 monthly RD shows ongoing savings habit from pension income.
Goal: Create another Rs. 50,000 monthly income from Rs. 40 lakhs corpus.
This is a clear and achievable financial objective with the right strategy.
FD-Based Income: Limits and Challenges
Current FD interest rate is around 6.5% to 7.5%.
With Rs. 40 lakhs, monthly income from FD is about Rs. 22,000 to Rs. 25,000.
To reach Rs. 50,000/month, you will need much higher returns.
FD interest is fully taxable as per your tax slab.
Inflation can reduce real value of this income over time.
FD gives safety but not high income or growth.
Monthly Income Generation – Need for Balanced Investment
To reach Rs. 50,000 monthly income, your funds need better growth and efficiency.
You can consider a diversified plan combining stability and higher returns.
A balanced portfolio with Systematic Withdrawal Plans (SWP) from mutual funds will work better.
Let us build this portfolio with simple and practical structure.
Suggested Investment Structure from Rs. 40 Lakhs
Invest Rs. 20 lakhs in debt mutual funds for stability and liquidity.
Invest Rs. 18 lakhs in equity-oriented hybrid mutual funds for growth and moderate risk.
Keep Rs. 2 lakhs in a savings bank or ultra-short-term fund for emergencies.
From the mutual funds, you can set up SWP (Systematic Withdrawal Plan).
It will allow monthly income while keeping principal relatively protected.
Why SWP from Mutual Funds is a Good Option
You can get monthly income like pension, from your investments.
Capital remains invested. Only chosen amount is withdrawn monthly.
It gives better control over taxation and liquidity.
You can stop, increase or reduce SWP any time.
If invested in hybrid and equity-oriented funds, returns are higher than FD.
Mutual Fund Category-wise Investment Purpose
Debt Mutual Funds (Rs. 20 lakhs):
These are less volatile than equity.
Suitable for regular income and lower risk.
Returns around 6.5% to 7.5% are possible.
Ideal for SWP of Rs. 15,000 per month.
Hybrid Mutual Funds (Rs. 18 lakhs):
These invest in both equity and debt.
They aim for balanced growth with moderate risk.
You can withdraw Rs. 30,000 to Rs. 35,000 monthly from this portion.
Over long-term, it protects against inflation better than FD.
Disadvantages of FDs in This Context
FD interest is taxed fully as per your slab.
No flexibility in income withdrawal timing.
Pre-mature exit reduces interest rate.
FD returns often fail to beat inflation in the long run.
For retirees needing monthly cash flow, SWP is more tax-efficient.
Monthly Income Plan Using SWP – Illustration
Rs. 15,000/month SWP from debt mutual fund.
Rs. 35,000/month SWP from hybrid mutual fund.
Total Rs. 50,000 per month income possible.
Equity portion helps capital grow and beat inflation.
Debt portion ensures stability and cash flow.
Taxation in Mutual Funds – New Rules (Important)
Long-Term Capital Gain (LTCG) from equity above Rs. 1.25 lakhs is taxed at 12.5%.
Short-Term Capital Gain (STCG) from equity is taxed at 20%.
Debt fund gains (LTCG/STCG) taxed as per income slab.
SWP gives flexibility to manage tax better than FD or annuity.
Why You Must Avoid Annuities
Annuity returns are fixed and very low.
No growth in invested capital.
Entire income is taxable.
No liquidity or early withdrawal option.
Once locked, you cannot change or exit.
It is not suitable for someone like you who needs control and better returns.
Why Actively Managed Mutual Funds are Better Than Index Funds
Index funds blindly copy market index.
No flexibility during market correction or volatility.
Actively managed funds adapt to market changes.
Fund manager can shift money based on market cycle.
These often outperform index funds in India.
You get professional fund management and risk control.
Why Not to Choose Direct Funds
Direct funds have no advisor support.
You may not know when to switch or hold.
Wrong decision can cause major loss.
Regular funds through a Certified Financial Planner give long-term guidance.
You get regular review and goal tracking.
Peace of mind is worth the small extra expense.
Why Not Real Estate
You mentioned no interest, and rightly so.
Real estate needs high capital.
Low rental yield and poor liquidity.
Long legal and selling process.
Risk of maintenance and disputes.
Not suitable for regular income post-retirement.
360 Degree Plan: Other Steps You Must Consider
Review RD after 12 months. Re-invest in mutual fund SIP for growth.
Keep 6 months’ expenses in liquid fund for emergency.
Nomination and Will should be updated for all investments.
Keep health insurance valid. Don’t depend only on pension for medical.
Track mutual fund performance every 6 months with Certified Financial Planner.
Increase SWP every 2 years to fight inflation.
Don’t break FD fully at once. Convert slowly as mutual fund corpus grows.
Never invest full money at once in equity. Use staggered approach.
Final Insights
You have done a great job by retiring without any loans.
Pension, FDs and RD show strong foundation. You need better returns now.
Rs. 50,000 monthly income from Rs. 40 lakhs is possible with mutual fund SWP strategy.
This approach gives income, tax efficiency and capital growth together.
FDs and annuities limit flexibility and returns.
A diversified mutual fund portfolio is your best choice today.
Work with a Certified Financial Planner to track this plan.
They can guide review, rebalancing and risk control.
Don’t delay. The sooner you start, the better your income security will be.
This plan gives you peace, stability and freedom in retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Kannan on Oct 09, 2023Hindi
