Have A Mix Of MFs For Retirement Planning

S. Pai, Vellore

I am 58 and I retired this year with Rs 2 crore from my company. I do not have a pension. How should I invest this corpus to get regular monthly income for 20 years?

Generally, senior citizens can invest in the following options for tax efficiency and regular income: Senior Citizens Savings Scheme, Pradhan Mantri Vaya Vandana Yojana and RBI Floating Rate Savings Bonds. But these are available only for citizens above 60 years.

As you are younger, you could invest in a mix of tax-saving fixed deposits and the following categories in mutual funds—hybrid, balanced advantage and short-term debt funds. You could opt for a systematic withdrawal plan, which is more tax efficient and allows customising the withdrawal rate per month. For example, if you invest Rs 40 lakh in hybrid funds and opt for a withdrawal rate of 6 per cent per annum, you will receive Rs 20,000 per month and its value can grow to Rs 1.25 crore after 20 years assuming 10 per cent returns from an aggressive hybrid fund. If you invest Rs 1 crore, you could get Rs 50,000 a month.

These are just some examples. It is advisable to take the help of an expert to do a detailed risk analysis and arrive at the appropriate requirement of monthly regular income.

Suhel Chander, Certified Financial Planner CM, Handholding Financials

Abhinav, Kota

I want to buy suitable health insurance that also covers Covid-related expenses, for my family of two children and spouse. How much sum insured should I look at?

You could buy a floater policy that covers all four of you and offers a refill/restore benefit. Look at a minimum of Rs 20 lakh sum insured or a figure twice your annual income, depending on the premium you can pay and type of room (twin sharing, single private room, etc.). Choosing higher category rooms increases the overall claim amount as other charges are linked to the room category.

Yes, health policies also cover hospitalisation expenses incurred due to Covid. Some cover domiciliary treatment too. You can also look at a separate Covid policy. For instance, various health insurers offer the Corona Kavach Policy (a short-term policy of three, six or nine months). The sum insured ranges from `50,000 to `5 lakh. It covers home treatment too. Be aware of the initial waiting period for Covid claims—usually 15 days for standalone Covid policies and 30 days for a normal health insurance policy. Before finalising, be sure to read the fine print.

UMA S CHANDER, Certified Financial PlannerCM,  Co-Founder, Handholding Financials

Seema Jha, Pune

I have Rs 10 lakh from selling an ancestral property. How should I invest this to get Rs 50 lakh for my child’s education 10 years later?

We are assuming that Rs 10 lakh is the net investible amount to get Rs 50 lakh at the end of 10 years. If you consider investing Rs 10 lakh in a debt mutual fund with a systematic transfer plan (STP) facility spread over 24 months to transfer into an equity-based mutual fund that has exposure to large-and-mid-caps, and assume 12 per cent average return over the period, you would be able to accumulate approximately Rs 34.15 lakh. With an additional SIP of Rs 7,500 in a good mix of large-and-mid-cap fund, you will be able to accumulate another `16.8 lakh, assuming an average return of 12 per cent over 10 years. The total accumulation would be Rs 51 lakh.

If you have a lump sum of Rs 5-5.5 lakh apart from the Rs 10 lakh, then instead of starting an SIP of Rs 7,500, you could invest the entire lump sum (Rs 15 lakh) similarly—in a debt fund with STP facility, with systematic transfer into a large-and-mid-cap combination fund. This way, too, you would be able to accumulate about Rs 51 lakh, assuming a 12 per cent average return.

Research before investing and invest based on your risk profile. Take an expert’s help if needed.

Hina Shah, Certified Financial PlannerCM & Financial Coach, LUHEM