Retirement is all about financial planning. One can sail through post-retirement years if one has planned for it early in life and invests in carefully selected instruments after retirement. However, the pattern of investing one’s post-retirement corpus has vastly changed in this century compared to what people used to do in the 20th century.
Let’s check what an average citizen could do in such a situation. The first broad options available to the common man is investing in fixed-income debt securities and in mutual funds or annuities (considering the equity market carries too high a risk to commit retirement funds).
Take 8-10% return as a decent goal
Experts say, if returns of 8%-10% is considered, a sum of Rs 1.5 crore will be sufficient to generate a monthly cashflow of Rs 1 lakh. The fixed income instrument that one can easily select is the Senior Citizens Savings Scheme which offers 8.2% interest that is just about the highest paid by any debt security backed by the government, and therefore, completely safe. One can invest Rs 30 lakh into it.
Post office Monthly Income Schemes and Fixed Deposits also offer returns of 7.5% and close to 8% respectively. Dey suggests that the entire money should not be put in one FD, but split up into smaller amounts and invested in FDs of different maturity tenures.
This part in debt
While Rs 50 lakh can be invested in such debt instruments, investment advisors suggest SWP (Systematic Withdrawal Plans) from equity-oriented funds which offer better returns with relatively less risk.
Types of market-linked instrument
The equity funds that one can consider for such situations are flexicap funds, hybrid funds with a tilt towards equity and large-cap funds. According to reports The better-performing flexicap funds have fetched 20%-25% returns over the past 5 years and 14%-17% over 10 years.
On the other hand, aggressive hybrid funds have delivered 16%-28% returns over the past 5 years and 12%-17% over the past 10 years.
Turning to large-cap funds, the returns have ranged between 17% and 23% over the past 5 years between 12% and 16% over the past 10 years.
An investor can split up his/her investment in mutual funds among these categories. They will combine to comfortably deliver more than Rs 1 lakh a month steadily.
The amount of Rs 1 lakh cash flow a month in a psychological mark. With a little planning, it is not impossible if one invests in the right instruments. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
