I am retiring after about four years and I will get a pension. I will get Rs 4 lakh from a recurring deposit (RD) soon. Since the said RD is maturing, I can continue to invest Rs 10,000 per month for five years. I want to invest all these funds into a mutual fund (MF) scheme that pays monthly dividend after five years. Suggest a suitable plan for investing Rs 4 lakh and Rs 10,000 per month in a systematic investment plan (SIP) for five years. I can take moderate risk.
It is recommended that you invest your Rs 4 lakh in a balanced fund. The equity exposure in these funds is not less than 65% at any given point of time. HDFC Prudence, HDFC Balanced, Birla Sunlife 95 are consistent performers. Invest in these through an STP (systematic transfer plan). STP works exactly like SIPs.
You can start your SIP, too, in the same funds. You can add a gold fund to bring in a different asset class to your portfolio. It can be purchased in the form of exchange-traded funds (ETFs) through your demat account or in funds, including Kotak Gold Fund and Reliance Gold Savings Fund, where you can start monthly investment.
In case you are dependant on these investments after your retirement, then you need to be vigilant. You may need to rebalance your portfolio after three-four years and gradually reduce equity exposure to around 30%.
A 50-year-old relative of mine wants to invest about Rs 10 lakh. This investment will be for 5-10 years and she expects a regular monthly income. This monthly income could be reinvested for the next five-six years. Is Post Office Monthly Income Scheme (Pomis) the best option?
There are a few options that can help build a corpus for her. One option is of course Pomis. She can invest the maximum amount of Rs 4.50 lakh (in case of single investor) in this scheme. She can also open an RD where monthly interest will get reinvested. As there is a cap on investment in Pomis if made singly, a joint account can be considered. The limit to invest in a joint account is Rs 9 lakh. However, a word of caution, this investment carries a minimum lock-in of a year. After the initial lock-in, you can withdraw the deposit prematurely. However, there will be a charge of 2% up to three years, which gets reduced to 1% if done after three years but before the maturity date. In case you believe that the funds may be required then invest only a partial amount of the corpus.
The other option you can consider is bank deposits. The rates are attractive and they provide the liquidity benefit as well. In case you want to take some exposure to risk, you can consider monthly income plans (MIPs). These take equity exposure up to 25%. Funds that have performed well are HDFC MIP, Reliance MIP and Birla SunLife MIP.
It may be prudent for you to go for a combination of the above mentioned investments.
Surya Bhatia is certified financial planner and principal consultant, Asset Managers
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