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Ramalingam Kalirajan |7167 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

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

Asked by Anonymous - Apr 23, 2024Hindi

I would like to invest a Crore of rupees , for monthly income. I was thinking of a bouquet of Corporate FD's ( Shriram , Sundaram , Bajaj etc ) , LIC , Bank FD's and Mutual Funds. My question how safe are Corporate FD's ? Like Bank deposits have an Insurance cover for upto Rs 5 lakhs , are there any insurance for corporate deposits. How much is the safe amount to deposit in Corporate FD's. Any other investment you advice for a safe 8-9% return .Can i invest in Gold , without actually buying it ?

Ans: Investing a significant amount like a crore for monthly income requires careful consideration of various factors. Let's address your concerns and explore suitable investment options:
Corporate FDs:
• Corporate Fixed Deposits (FDs) offer higher interest rates compared to bank FDs but come with higher risk.
• Unlike bank deposits, corporate FDs do not have any insurance cover. Therefore, investing a large sum in corporate FDs may expose you to higher risk.
• While some reputed companies offer corporate FDs with stable returns, it's essential to assess the creditworthiness and reputation of the issuing company before investing.
• Consider diversifying your fixed income investments across multiple corporate FDs to mitigate risk, and limit exposure to a portion of your overall investment portfolio.
LIC and Bank FDs:
• LIC schemes like LIC Jeevan Akshay offer annuity options providing regular income for life, suitable for retirement planning.
• Bank FDs provide safety and liquidity, but interest rates are relatively lower compared to corporate FDs.
• For safety, ensure that your bank FD investments are within the limit of Rs. 5 lakhs per depositor per bank, covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Mutual Funds:
• Debt mutual funds, particularly low-duration or short-duration funds, can provide stable returns with relatively lower risk compared to equity investments.
• Consider investing in debt mutual funds with a track record of consistent returns and low expense ratios, aligning with your risk appetite and investment horizon.
Gold Investments:
• Gold can act as a hedge against inflation and provide diversification to your investment portfolio.
• You can invest in gold through Gold Exchange Traded Funds (ETFs), Gold Savings Funds, or Sovereign Gold Bonds (SGBs), which offer safety, liquidity, and convenience without the need for physical storage.
Other Investment Options:
• Consider exploring other fixed income instruments like Government Savings Schemes (e.g., Senior Citizen Savings Scheme), Post Office Monthly Income Scheme (POMIS), and debt-oriented hybrid mutual funds for regular income with relatively lower risk.
• Evaluate your risk tolerance, investment horizon, and financial goals before making investment decisions. Consider consulting with a Certified Financial Planner to develop a comprehensive financial plan tailored to your needs and aspirations.
In summary, while corporate FDs offer higher returns, they also entail higher risk. Diversification across multiple investment avenues, including LIC schemes, bank FDs, mutual funds, and gold investments, can help achieve a balance between safety and returns. Always prioritize capital preservation and risk management when structuring your investment portfolio for regular income.

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