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Would you please advise investment option for my retirement money

I am 68 years old staying with my spouse in my apartment in Bangalore. Recently I got separated from a Cowhere I worked for 10 years. I am likely to get EPF along with my contribution which would be around 57 lakhs. I have already made investment in senior citizen scheme. I do not have any loans. I have health insurance of Rs 10 lakhs. No specific family commitments. Would you please advise investment option for the money, I shall be getting this month?

Apr 22, 2016 by M Senapati, Bangalore  |   Financial Planning

You have not given sufficient details in your query. Your appropriate investment choices should be determined by your overall asset allocation profile, income from your existing investments, your lifestyle needs and returns expectations thereof. We, in Advisorkhoj, do not give specific investment advice, but we can share with you some general guidance. Since, you are 68 years old and assuming you have retired post the separation from your ex-employer, you need to plan for a retired life of 20 – 25 years from now onwards. Over such a long investment tenure, risk free fixed income investment returns, will not be able to keep pace with inflation. Therefore, you need to have some equity in your portfolio. Going by simple thumb rules, you need to have 25 – 30% allocation to equities in your overall portfolio (your actual desired equity allocation will depend on your individual financial situation). In absence of your other investment information, assuming your EPF corpus is the major part of retirement corpus, you can invest in mutual fund monthly income plans (MIPs), which are hybrid debt oriented mutual funds. In these funds, around 20 to 30% is invested in equities, while the balance is invested in fixed income. Top performing hybrid debt oriented funds have given 9 – 10% trailing annualized returns over the last 10 years. In the last 1 year or so, the equity market has seen nearly 11-12% correction and therefore, the trailing returns are a little depressed. But the equity market has already bounced back more than 15% in just the last 50 days. In a secular bull market, it is quite possible for these funds to give double digit annual returns. Birla Sun Life MIP II – Wealth 25 Plan, UTI MIS Advantage Fund, ICICI Prudential MIP 25, IDFC MIP, Sundaram MIP are amongst the best mutual fund MIPs. These funds give monthly or quarterly dividends also. If you want to explore other hybrid debt oriented funds, please check see our MF Research section.

From a taxation perspective, we think a systematic withdrawal plan (SWP) from MIPs is the most tax efficient option of getting regular cash-flows from your investment (please see our articles, Systematic Withdrawal Plans from Debt Mutual Funds give the most tax efficient income and SWP from Debt Mutual Funds give the most tax efficient income over fixed deposits). In an SWP, however, you should note that, you should not draw more than the average returns of these funds, otherwise, you will end up exhausting your investment before you want to.

You should plan investment goals with your financial advisor and make the best decision suited to your own personal needs.

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