NRI Retiree Seeking Investment Advice for 4 Lakh Monthly Income

Dear Sir, I am a NRI and planning to retire by end of 2025. I have currently savings in MF and deposits totaling 1.8 crores. Until my retirement next year can save 1.25 crore more. I have Insurance plan and I will get approx.1.25 crores pay outs in Total in 2026/2028/2029 (Total) . My EMI for my current house is fully paid. I also two properities and I expect to sell both by end of 2025 and will get approx. 1.25 crores. I would like to seek you advise on parking my funds and FD's so that after my retirement I can get approx. 4 lacks per month. Looking for your advise.

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

Ans: You have done very well by planning for your annual expenses in advance. Most people miss this important step. You have also identified the yearly requirement and your monthly saving capacity. This shows good financial discipline. Let me give you a 360-degree perspective on how you can manage these periodic expenses better.

» Nature of Your Annual Expenses
– Your expenses like term insurance premium, medical premium, NPS contribution, travel, and school fees are fixed in nature.
– These expenses are unavoidable and need liquidity at specific intervals.
– Safety of funds is important because these are non-negotiable commitments.
– Tax efficiency is also important because you are in the 30% tax slab.
– Therefore, your investment vehicle should provide liquidity, safety, and some growth.

» Why Not Use Regular Bank Savings
– Many people keep such money in savings account.
– Savings account earns low interest.
– After tax, returns are even lower.
– Inflation further reduces value of such idle money.
– Hence, keeping entire Rs.40,000 every month in savings account is not efficient.

» Recurring Deposits (RD)
– RD is simple to operate.
– You can commit Rs.40,000 per month easily.
– Interest is fixed and predictable.
– But interest is taxed fully as per slab.
– In your case, 30% tax reduces net return significantly.
– Liquidity is limited. Premature withdrawal leads to penalty.
– RD is safe but not tax efficient.

» Fixed Deposits (FD)
– FD gives fixed interest.
– It is stable and safe.
– But interest is fully taxable like RD.
– Premature withdrawal leads to penalty.
– Not suitable for regular liquidity needs.
– FD works better for lump sum parking, not monthly parking.

» Liquid Funds
– Liquid funds invest in very short-term money market instruments.
– They provide good liquidity. Redemption happens in one day.
– Returns are slightly higher than savings account and sometimes higher than RD post-tax.
– These funds are relatively safe as they avoid long duration risk.
– But they are not fully tax efficient for you. Gains are taxed as per slab since these are debt funds.
– Still, liquid funds are convenient for monthly parking and periodic withdrawals.

» Ultra Short-Term Debt Funds
– These funds invest in slightly longer maturity instruments than liquid funds.
– They provide better returns than liquid funds in most cases.
– They carry low interest rate risk.
– Liquidity is good, redemption in one day.
– They are taxed as per income slab if gains realised.
– For annual expense management, these can be more rewarding than RD and FD.
– Risk is slightly higher than liquid funds but still manageable.

» Arbitrage Funds
– Arbitrage funds invest in equity and derivatives.
– They are treated as equity for taxation.
– This means after one year, gains above Rs.1.25 lakh are taxed at 12.5%.
– But for short term (less than one year), gains are taxed at 20%.
– These funds provide returns close to liquid funds.
– Volatility is low compared to pure equity.
– Suitable for high tax bracket investors like you.
– But for annual expenses, time horizon is less than one year. So, taxation benefit reduces.

» Comparing Options Objectively
– Savings account: very low return, very liquid.
– RD: predictable return, taxed at 30%, liquidity low.
– FD: predictable return, taxed at 30%, liquidity low.
– Liquid funds: better post-tax return, high liquidity, manageable risk.
– Ultra-short term funds: slightly higher return, similar liquidity, manageable risk.
– Arbitrage funds: good for long horizon, but for annual expense planning, not very efficient.

» Tax Angle for You
– You are in 30% tax slab.
– RD and FD returns are fully taxable.
– Debt funds also taxed as per slab for short term.
– But debt funds offer some flexibility in timing redemption.
– Liquid and ultra-short funds are still better because you can redeem only when required.
– This reduces tax outgo compared to RD where tax applies yearly irrespective of withdrawal.

» Practical Execution Plan
– You need Rs.4.68 lakh per year.
– You save Rs.40,000 every month.
– Best way is to set up a Systematic Investment Plan (SIP) in liquid or ultra-short term debt funds.
– This way, money is parked every month automatically.
– When expenses arise, you can redeem only that much.
– Rest of the money continues to earn return.
– This makes it flexible and efficient.

» Behavioural Benefits
– With RD or FD, once maturity comes, all money comes together.
– There is a chance of spending extra.
– With liquid or debt funds, you redeem only required amount.
– This helps in disciplined spending.
– Also avoids locking in money unnecessarily.

» Why Not Index Funds or ETFs
– Some investors confuse these products for short-term parking.
– But index funds and ETFs are equity-oriented.
– They are volatile in short term.
– For annual commitments, volatility is dangerous.
– Index funds may fall 10% in one month.
– That will disturb your annual expense plan.
– Actively managed debt funds or liquid funds are far safer for your goal.

» Why Not Direct Mutual Funds for You
– Many think direct funds give higher return by saving distributor fee.
– But investment discipline and product selection is key.
– Investing through a Certified Financial Planner and MFD gives guidance.
– They help you align funds with goals.
– Mistakes in direct funds may cost more than saved fee.
– Regular plan with CFP-backed MFD gives you personalised handholding.
– For someone with family responsibilities and annual commitments, guidance matters more.

» Risk Management
– Even liquid and debt funds carry small risks.
– But risk is far lower than equity.
– Choose funds with strong track record.
– Diversify across 2-3 funds.
– Review once in six months with your planner.
– This keeps your annual expense plan safe and smooth.

» Integration with Your Overall Financial Plan
– These annual expenses are part of your cash flow management.
– They should not be mixed with long term goals.
– Keep these liquid and debt fund investments separate.
– Long term goals like retirement, children’s education need separate equity allocation.
– This separation of buckets will give clarity.
– You will avoid using long-term money for short-term needs.

» Psychological Peace
– Knowing your annual expenses are already funded gives peace of mind.
– You will enjoy travel without worrying about money.
– You will pay school fee on time without stress.
– Insurance premiums will not disturb your monthly budget.
– This builds confidence in your financial journey.

» Steps You Can Take Immediately
– Decide to channel Rs.40,000 monthly in a liquid or ultra-short term debt fund.
– Mark each investment as “Annual Expenses Fund.”
– Keep a schedule of due dates of all expenses.
– One week before due date, redeem required amount.
– Keep records of withdrawals for clarity.
– At year end, review with your Certified Financial Planner.

» Finally
– You are already disciplined in savings. That itself is a big achievement.
– Your goal is not wealth creation here, but smooth liquidity.
– RD and FD will eat away your return due to taxation.
– Liquid or ultra-short term debt funds will suit you better.
– These will give you liquidity, safety, and efficiency.
– Stay consistent with this approach. Over years, you will see the benefits.
– Always review with your Certified Financial Planner for best alignment.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

Ans: You have built a strong base. You have raised your sons well. They live independently. You and your wife now want a peaceful and enjoyable retired life. You have created wealth with discipline. You have no home loan. You live in your own house. This gives strength to your cash flow. Your savings across equity, mutual funds, and bank deposits show good clarity. I appreciate your careful preparation. You deserve a happy retired life with travel and comfort.

» Your Present Position
Your current financial position looks very steady. You hold direct equity of around Rs 2.5 Cr. You hold equity mutual funds worth Rs 50 lakh. You also have Rs 50 lakh in bank deposits and other secured savings. Your two rental properties add more comfort. You earn around Rs 40,000 per month from rent. You also live in your owned house in Delhi NCR. So you have no rent expense.

Your total net worth crosses Rs 5.5 Cr easily. This gives you a strong base for your retired life. You plan to spend around Rs 24 lakh per year for all expenses, including travel. This is reasonable for your lifestyle. Your savings can support this if planned well. You have built more than the minimum needed for a comfortable retired life.

» Your Key Strengths
You already enjoy many strengths. These strengths hold your plan together.

You have zero housing loan.

You have stable rental income.

You have children living independently.

You have a balanced mix of assets.

You have built wealth with discipline.

You have clear goals for travel and lifestyle.

You have strong liquidity with Rs 50 lakh in bank and secured savings.

These strengths reduce risk. They support a smooth retired life with less stress. They also help you handle inflation and medical costs better.

» Your Cash Flow Needs
Your yearly expense is around Rs 24 lakh. This includes travel, which is your main dream for retired life. A couple at your stage can keep this lifestyle if the cash flow is planned well. You need cash flow clarity for the next 30 years. Retirement at 56 can extend for three decades. So your wealth must support you for a long period.

Your rental income gives you around Rs 4.8 lakh per year. This covers almost 20% of your yearly spending. This reduces pressure on your investments. The rest can come from a planned withdrawal strategy from your financial assets.

You also have Rs 50 lakh in bank deposits. This acts as liquidity buffer. You can use this buffer for short-term and medium-term needs. You also have equity exposure. This can support long-term growth.

» Risk Capacity and Risk Need
Your risk capacity is moderate to high. This is because:

You own your home.

You have rental income.

Your children are financially independent.

You have large accumulated assets.

You have enough liquidity in bank deposits.

Your risk need is also moderate. You need growth because inflation will rise. Travel costs will rise. Medical costs will increase. Your lifestyle will change with age. Your equity portion helps you beat inflation. But your equity exposure must be managed well. You should avoid sudden large withdrawals from equity at the wrong time.

Your stability allows you to keep some portion in equity even during retired life. But you should avoid excessive risk through direct equity. Direct equity carries concentration risk. A balanced mix of high-quality mutual funds is safer in retired life.

» Direct Equity Risk in Retired Life
You hold around Rs 2.5 Cr in direct equity. This brings some concerns. Direct equity needs frequent tracking. It needs research. It carries single-stock risk. One mistake may reduce your capital. In retired life, you need stability, clarity, and lower volatility.

Direct funds inside mutual funds also bring challenges. Direct funds lack personalised support. Regular plans through a Mutual Fund Distributor with a Certified Financial Planner bring guidance and strategy. Regular funds also support better tracking and behaviour management in volatile markets. In retired life, proper handholding improves long-term stability.

Many people think direct funds save cost. But the value of advisory support through a CFP gives higher net gains over long periods. Direct plans also create more confusion in asset allocation for retirees.

» Mutual Funds as a Core Support
Actively managed mutual funds remain a strong pillar. They bring professional management and risk controls. They handle market cycles better than index funds. Index funds follow the market blindly. They do not help in volatile phases. They also offer no risk protection. They cannot manage quality of stocks.

Actively managed funds deliver better selection and risk handling. A retiree benefits from such active strategy. You should avoid index funds for a long retirement plan. You should prefer strong active funds under a disciplined review with a CFP-led MFD support.

» Why Regular Plans Work Better for Retirees
Direct plans give no guidance. Retired investors often face emotional decisions. Some panic during market fall. Some withdraw heavily during market rise. This harms wealth. Regular plan under a CFP-led MFD gives a relationship. It offers disciplined rebalancing. It improves long-term returns. It protects wealth from poor behaviour.

For retirees, the difference is huge. So shifting to regular plans for the mutual fund portion will help long-term stability.

» Your Withdrawal Strategy
A planned withdrawal strategy is key for your case. You should create three layers.

Short-Term Bucket
This comes from your bank deposits. This should hold at least 18 to 24 months of expenses. You already have Rs 50 lakh. This is enough to hold your short-term cash needs. You can use this for household costs and some travel. This avoids panic selling of equity during market downturn.

Medium-Term Bucket
This bucket can stay partly in low-volatility debt funds and partly in hybrid options. This should cover your next 5 to 7 years. This helps smoothen withdrawals. It gives regular cash flow. It reduces market shocks.

Long-Term Bucket
This can stay in high-quality equity mutual funds. This bucket helps beat inflation. This bucket helps fund your travel dreams in later years. This bucket also builds buffer for medical needs.

This three-bucket strategy protects your lifestyle. It also keeps discipline and clarity.

» Handling Property and Rental Income
Your properties give Rs 40,000 monthly rental. This helps your cash flow. You should maintain the property well. You should keep some funds aside for repairs. Do not depend fully on rental growth. Rental yields remain low. But your rental income reduces pressure on your investments. So keep the rental income as a steady support, not a primary source.

You should not plan more real estate purchase. Real estate brings low returns and poor liquidity. You already own enough. Holding more can hurt flexibility in retired life.

» Planning for Medical Costs
Medical costs rise faster than inflation. You and your wife need strong health coverage. You should maintain a reliable health insurance. You should also keep a medical fund from your bank deposits. You may keep around 3 to 4 lakh per year as a buffer for medical needs. Your bank savings support this.

Health coverage reduces stress on your long-term wealth. It also avoids large withdrawals from your growth assets.

» Travel Planning
Travel is your main dream now. You can plan your travel using your short-term and medium-term buckets. You can take funds annually from your liquidity bucket. You can avoid touching long-term equity assets for travel. This approach keeps your wealth stable.

You should plan travel for the next five years with a budget. You should adjust your travel based on markets and health. Do not use entire gains of equity for travel. Keep travel budget fixed. Add small adjustments only when needed.

» Inflation and Lifestyle Stability
Inflation will impact lifestyle. At Rs 24 lakh per year today, the cost may double in 12 to 14 years. Your equity exposure helps you beat this. But you need careful rebalancing. You also need disciplined review with a CFP-led MFD. This will help you manage inflation and maintain comfort.

Your lifestyle is stable because your children live independently. So your cash flow demand stays predictable. This makes your plan sustainable.

» Longevity Risk
Retirement at 56 means you may live till 85 or 90. Your plan should cover long years. Your total net worth of around Rs 5.5 Cr to Rs 6 Cr can support this. But you need a proper drawdown strategy. Avoid high withdrawals in early years. Keep your travel budget steady.

Do not depend on one asset class. A mix of debt and equity gives comfort. Keep your bank deposits as cushion.

» Succession and Estate Planning
Since you have two sons who are settled, you can plan a clear will. Clear distribution avoids conflict. You can also assign nominees across accounts. You can also review your legal papers. This gives peace to you and your family.

» Summary of Your Retirement Readiness
Based on your assets and cash flow, you are ready to retire. You have enough wealth. You have enough liquidity. You have enough income support from rent. You also have good asset mix. With proper planning, your lifestyle is comfortable.

You can retire now. But maintain a disciplined withdrawal strategy. Shift more reliance from direct equity into professionally managed mutual funds under regular plans. Keep your liquidity strong. Review once every year with a CFP.

Your wealth can support your travel dreams for many years. You can enjoy retired life with confidence.

» Finally
Your preparation is strong. Your intentions are clear. Your lifestyle needs are reasonable. Your assets support your dreams. With a balanced plan, steady review, and mindful spending, you can enjoy a comfortable retired life with your wife. You can travel the world without fear of running out of money. You deserve this peace and joy.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment