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How to earn monthly return from lump sum investment

My close relative's son-in-law passed away recently at very young age. His family got a settlement of around 50L and he was surviving with his wife and 2 kids (Girl 9 years and Boy 3 years). So, he approached me for investment avenues and his primary concern is to get monthly income from his investments. Following were my suggestions 10L in DSP balanced(Monthly Dividend) 10L in ICICI Balanced (Monthly Dividend) 4L in BNP Balanced - NFO - Dividend Monthly Rs. 5000 SIP - DSP Micro Cap Fund Sukanya Samridhi - Rs. 50000 Yearly Kindly suggest above recommendation can be made better by inclusion or replacing any of the funds?

Apr 9, 2017 by Mohan, Kochi  |   Financial Planning

Your investment suggestion to your close relative's family is partly correct.

Why partly correct because we feel that you should not advise them to invest in a mutual fund NFO when the need is to meet monthly expenses. We think, the family should first invest Rs 5 lakhs in a liquid fund to create an emergency corpus and the rest Rs 45 Lakhs in balanced funds which give monthly dividends, as rightly suggested by you.

The balanced fund schemes suggested by you are good. You may add HDFC Prudence and L&T India Prudence Fund as well, as these are amongst top performing balanced funds and also give monthly dividends.

We also feel that once the family is able to meet their monthly expenses out of the invested corpus, that they should start building a future corpus for future of the children, by investing the monthly surplus amount via mutual fund SIPs.

You should not invest any lump sum amount in Sukanya Samriddhi Scheme etc. as these will not be able to generate enough returns for the future of your relative's children.

Also, DSP BlackRock Micro Cap fund is not accepting any fresh investments.

Hope the above helps you. Thanks for writing to Advisorkhoj.

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