Ask Mint Money | Rebalance debt-equity ratio in your portfolio after retirement

Ask Mint Money | Rebalance debt-equity ratio in your portfolio after retirement

I am 52 years old and retired from service last year. My only source of income is pension. The money which I got after retirement has been temporarily parked in a bank for one year. I have not yet taken any decision on what to do with this money due to lack of proper knowledge. Please advise.


You can ideally create two sources of income. First is your monthly pension and the second can be the interest income you can derive from your retirement corpus.

The key is to determine how much additional income you want over and above your pension income. As you have not mentioned your retirement corpus as well as your monthly needs, we assume this retirement corpus would generate a return of 10% in the long term.

It is recommended that you invest the corpus with a debt-equity mix of 75:25. We would have preferred to have a higher equity exposure but considering this is the only corpus you have, we have taken a more conservative stand.

Debt basket should comprise of fixed maturity plans (FMP). FMPs are somewhat similar to fixed deposits where they strive to achieve a predetermined interest rate by investing in securities with a fixed maturity. Also, consider investing in dynamic debt mutual funds which also gives you the liquidity. Monthly income plans from mutual funds is another good option. This category takes exposure to equity up to 25% and can also be used for giving a monthly income. The equity exposure helps the fund to give a kicker to the return.

Besides the debt category, look at equity investment through systematic transfer plan (STP). STP is a replica of systematic investment plan. In case of SIP the amount is debited from your bank account while in STP the amount is switched from one scheme (parking fund) to another (designated fund). However, exposure to this category should be limited to the amount which can be considered a lock-in for three-five years. You can again opt for dividends for some payouts to come to you regularly.

Choose funds that are hybrid equity-oriented, large-cap equity and diversified funds. Funds such as HDFC Prudence, Tata Balanced from the hybrid category and DSP BlackRock Top 100, HDFC Top 200, Birla Frontline Equity from the equity category are good options. In addition to these investments, make sure you have a health insurance unless you already have the same or is covered by your previous employer.

Surya Bhatia is a certified financial planner and principal consultant, Asset Managers

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