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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 22, 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 Ajay on Sep 20, 2025Hindi

I’m 54 and not working right now. Looking for retirement investment ideas—something I can invest in for 5-6 years and then start getting monthly income. Any suggestions?

Ans: Your self-awareness and discipline in spending are truly impressive. At 54, with 5–6 years till withdrawals begin, your strategy can shape a peaceful future.

» Planning Your Time Horizon and Safety
– You want investment for 5–6 years, then monthly income after.
– Plan balances growth in these years with safety for withdrawals.
– Shorter timeframes mean you need to be careful with high-risk products.
– Focus on balanced growth plus readiness for steady income at 60.

» Growth Phase: How to Invest Next 5–6 Years
– Choose balanced advantage or hybrid funds for core investment now.
– Such funds blend debt with equity, offering growth and cushioning.
– Actively managed hybrid funds can shift asset allocation as markets change.
– Avoid putting all savings into pure equity funds or very aggressive funds at this stage.
– Review your portfolio each year and rebalance if any fund underperforms.

» Protecting Capital as You Near Retirement
– After 3–4 years, systematically move gains from equity-oriented funds into low-volatility debt funds.
– This step shields your retirement corpus from last-minute market falls.
– Debt funds and short-duration funds keep your money safe for withdrawals.
– Avoid locking full amount in products with penalties for early exit.

» Converting Corpus Into Monthly Income
– When retirement starts, use a “Systematic Withdrawal Plan” (SWP) from mutual funds.
– SWP lets you get a fixed sum every month, much like an income.
– You decide how much to withdraw each month based on your needs.
– This reduces longevity risk and gives flexibility if expenses increase due to inflation.

» Diversifying Income Streams
– Along with SWP, keep some funds in Senior Citizens Saving Scheme or Post Office Monthly Income Scheme.
– These schemes add a safety layer, giving quarterly or monthly interest.
– Consider keeping a year’s expenses in a liquid or ultra-short-term fund for emergencies.

» Actively Managed Mutual Funds as the Core Solution
– Active fund managers react to changes in economy, protecting gain and controlling risk.
– Passive index funds only track market, lacking the human judgement to reduce risk.
– Hybrid or balanced advantage funds, led by professionals, adjust allocation for best mix.
– Actively managed funds provide more stability, especially in Indian markets where volatility remains high.

» Why Not Index Funds or Direct Funds Now
– Index funds simply mirror the market, offering no protection in tough years.
– At this life stage, active adjustment is vital, not just copying the index.
– For regular funds, investing with support from CFP and a trusted MFD brings regular reviews and advice.
– Direct fund investing on your own adds emotional strain and risk of mistakes, especially around critical withdrawal years.

» Making a Withdrawal Plan for 5–6 Years Later
– Design your SWP for expected expenses, not more, to make corpus last longer.
– Withdraw less in early years, increase after 2–3 years as costs rise.
– Review withdrawal plan yearly and adjust for inflation or unexpected needs.

» Emergency Buffer Remains Crucial
– Before you start drawing income, set aside 6–12 months’ needs in an ultra-safe account.
– This buffer means you never withdraw from mutual funds during poor market years.

» Avoiding Common Mistakes
– Don’t invest all in one fund or one type of product.
– Don’t chase very high short-term returns, which add unneeded risk now.
– Don’t withdraw too much too early; plan for a 25+ year income period.
– Don’t stop annual reviews; markets and rules change.

» Taxation Insights for Your Planning
– Equity fund withdrawals above Rs 1.25 lakh LTCG each year attract 12.5% tax from April 2025.
– Short-term gains are taxed at 20%. Hold investments over one year wherever possible.
– Debt mutual funds and hybrid fund interest are added to your income and taxed as per your slab.

» Family Communication and Documentation
– Update nominee details for all your investments.
– Keep records of accounts and SWP instructions in one file.
– Inform family members about where funds and instructions are stored.

» Psychological Preparation for Monthly Withdrawals
– Post-retirement income is about peace and safety, not only maximum returns.
– Focus on consistent income and capital safety, not short-term gains.
– Enjoy your retired years without market stress by choosing reliable products.

» Ongoing Support from a Certified Financial Planner
– Reviewing plans with a CFP helps you handle rule changes and income needs.
– Expert guidance helps you invest, withdraw, and rebalance smartly over retirement.
– Trusting a professional keeps your plan strong and flexible.

» Final Insights
– For the next 5–6 years, build a portfolio with actively managed hybrid funds.
– Gradually move to safer debt funds as your withdrawal years near.
– Use SWP to create monthly income, with extra backup in postal or government schemes.
– Avoid index, direct, or ultra-risky funds at this stage.
– Keep all paperwork and family communication clear.
– Stay disciplined and hopeful. Your steady approach assures a comfortable retirement.

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.