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I have a corpus of 1 crore.

- Invested 15 lakh in SBI BALANCED FUNDS

- 10 lakh in MOD

- 1 lakh in Corporate bond

- 1.5 lakh per year in SBIL pension bonds.

- 10 lakh in FD Plan

- Senior citizens saving deposit 15 lacs

How do I invest the rest for growth to beat inflation?

I am drawing net pension of 1 lakh, and covered by CGHS for 10 yrs.

- Name withheld

Your plan to create a solid portfolio that can beat inflation throughout the years is important during the post-retirement stage. Your pension of 1 Lakh certainly gives you a cushion at present, but over the period its purchasing power will get reduced due to inflation. Considering a 6% inflation, Rs1 Lakh to today would be equal to 75,000 after 5 years and 55000 after 10 years. At the same time, the post-retirement stage usually is for 20 – 25 years, hence your overall portfolio must generate a higher return than inflation. Based on the information shared in your query most of your investment is in debt instruments and the only equity allocation you have at present is through SBI Balanced Funds which has close to 70% in equity. Effectively at present, your investment has close to 10-11% in equities and the rest in debt.

Normally even in the post-retirement stage, you should have a reasonable equity allocation as it is the only asset class that has the potential to consistently beat inflation in the long run. For your investments, you may consider a blend of debt, conservative balanced and equity where equity allocation can be in the range of 25-30% depending on your needs. If you plan to use a part of your accumulated corpus for your monthly needs along with your pension in future which may be a possibility considering inflation then you should invest in equity from the existing corpus of 1 Crore.

For debt investments, you have already invested in Senior Citizen Saving Scheme and you can consider investing in Corporate Bond Funds and Banking & PSU Debt funds. In hybrid or balanced funds, you can invest in Balanced Advantage or Dynamic Asset Allocation Funds instead of Equity oriented hybrid funds as these carry less risk. For equity allocation, you can invest in Index Fund, Large Cap and Flexi Cap Funds.

- Answer by Harshad Chetanwala, founder MyWealthGrowth.com

(Have personal finance queries? Email mintmoney@livemint.com)

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