Once, there was a careful gardener who would water his plants just enough – not too much, not too little – to maintain their optimal growth. Similarly, investing ₹50 lakhs for regular income, especially after retirement, requires a delicate balancing act.
Your hard-earned money should be invested judiciously to ensure it provides you with a steady income, keeps pace with inflation, and remains accessible in times of need.
- Identify Your Needs: Determine your monthly expenses and how much regular income you would need to maintain your desired lifestyle. Don’t forget to account for inflation and occasional big-ticket expenses.
- Risk Tolerance: As a retiree, you’re likely to have a lower risk tolerance. The primary goal is to preserve the capital and generate a steady income.
Now, let’s explore a few investment options in India that can suit this conservative, low-risk approach:
- Senior Citizen Savings Scheme (SCSS): Tailored for those above 60, SCSS provides quarterly interest payments and a tax break up to ₹1.5 lakh under Section 80C. The current interest rate is around 7.4% p.a., offering a safe and reasonably high return.
- Post Office Monthly Income Scheme (POMIS): Another government-backed scheme providing monthly interest income. Though the returns (around 6.6% p.a.) are slightly lower than SCSS, it’s a safe bet.
- Pradhan Mantri Vaya Vandana Yojana (PMVVY): This pension scheme, managed by LIC, provides an assured return of 7.4% p.a., payable monthly for ten years.
- Bank Fixed Deposits (FDs): Bank FDs can be a reliable option, with interest income paid monthly, quarterly, or annually. Opt for a bank with the highest FD interest rate for senior citizens.
- Systematic Withdrawal Plan (SWP) in Debt Mutual Funds: SWP can provide a regular income while potentially offering higher returns than fixed income schemes. However, the returns aren’t guaranteed and can vary.
- Annuity Plans: Annuity plans from insurance companies can provide a lifelong steady income, but the returns are generally lower than the options above, and the principal amount is not returned.
- Rental Income: If you’re comfortable with illiquidity, real estate could provide a significant rental income.
- Stocks Exposure: You can take a small exposure of 10% to 20% also to direct equity or equity funds, because thats is likely to beat inflation over the long term. But this must be done carefully after checking your risk profile assessments.
While deciding the mix, remember that having multiple income streams can provide a safety net against unforeseen circumstances.
A SEBI registered investment advisor can provide personalised guidance based on your specific needs and risk tolerance. RIAs like Jama Wealth specialise in understanding client requirements and creating customised investment strategies to help achieve their financial goals.
Remember, the key is to create a garden of investments where different plants (investments) cater to various needs. Just like a well-tended garden gives fruits regularly, a well-planned portfolio can provide you with regular income to enjoy your golden years comfortably.
