NRI Retiree Seeking Investment Advice for 4 Lakh Monthly Income

Ans: You aim to retire by the end of 2025 and generate an income of approximately Rs. 4 lakh per month post-retirement. You have savings, potential insurance payouts, and expected property sales that will contribute to your retirement corpus. Let’s explore how to achieve your monthly income goal while maintaining financial security.

Assessing Your Retirement Corpus
By the end of 2025, your total retirement corpus is expected to be:

Current Savings: Rs. 1.8 crores in mutual funds and deposits.
Future Savings: Rs. 1.25 crores you plan to save by the end of 2025.
Insurance Payouts: Rs. 1.25 crores expected between 2026 and 2029.
Property Sales: Rs. 1.25 crores expected from selling your two properties.
This brings your total potential corpus to Rs. 5.55 crores.

Strategic Allocation of Funds
To generate Rs. 4 lakh per month post-retirement, a combination of debt and equity mutual funds is advisable. This strategy will allow you to benefit from market growth while ensuring stability through debt instruments.

1. Debt Mutual Funds for Stability
Debt mutual funds provide stable returns with lower risk compared to equity. These funds can form the backbone of your retirement income strategy.

Systematic Withdrawal Plan (SWP): By investing a portion of your corpus in debt mutual funds, you can set up an SWP. This will allow you to withdraw a fixed amount monthly, ensuring a steady income.

Allocation Suggestion: Allocate about 60-70% of your corpus to debt funds. This would be around Rs. 3.33-3.88 crores. The expected returns, combined with SWP, can provide a significant portion of your monthly requirement.

2. Equity Mutual Funds for Growth
While debt funds offer stability, equity mutual funds provide the growth needed to counter inflation over the long term.

Systematic Transfer Plan (STP): Invest in equity funds through an STP from debt funds. This strategy will allow you to gradually move funds into equity, reducing market timing risk.

Allocation Suggestion: Allocate about 20-30% of your corpus to equity mutual funds, which would be around Rs. 1.11-1.66 crores. The growth potential of equity will help maintain the purchasing power of your withdrawals over time.

3. Maintaining Liquidity and Safety
While the above strategies focus on income generation, it’s essential to maintain a portion of your corpus in liquid and safe instruments.

Emergency Fund: Set aside at least Rs. 20-30 lakhs in a savings account or liquid fund. This will serve as your emergency fund, ensuring you can cover unexpected expenses without disrupting your investment strategy.

Fixed Deposits: While FDs are not the primary income generator, a small allocation (around 10%) can be kept in FDs for short-term needs. This would be about Rs. 55 lakhs.

Generating Rs. 4 Lakhs Monthly
To achieve a monthly income of Rs. 4 lakhs, you can utilize the SWP from debt funds, supplemented by equity fund returns.

Debt Fund SWP: A well-structured SWP from debt mutual funds can provide the stability and predictability required for your monthly income.

Equity Fund Growth: The equity portion will provide the necessary growth to keep your income rising with inflation.

Monitoring and Adjusting
Your financial plan requires regular monitoring to ensure it remains aligned with your goals.

Annual Review: Review your portfolio annually to make necessary adjustments based on market conditions and your evolving needs.

Rebalancing: Periodically rebalance your portfolio to maintain the desired debt-equity ratio, ensuring continued growth and stability.

Final Insights
To achieve your post-retirement goal of Rs. 4 lakh per month, a combination of debt and equity mutual funds, utilizing SWP and STP strategies, is more effective than relying solely on fixed deposits. This approach provides a balance of growth and stability, ensuring that your corpus lasts throughout your retirement.

Debt Funds for Stability: Use debt funds for a steady monthly income through SWP.
Equity Funds for Growth: Invest in equity funds to combat inflation and enhance returns.
Maintain Liquidity: Keep a portion in liquid and safe instruments for emergencies.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in