How to invest Rs 40 lakh in mutual funds to get annual income and Rs 1 crore at the end of 15 years?
Our suggestion is that you invest 50% in quality equity funds such as Mirae Asset Largecap, Parag Parikh Long Term Equity and ICICI Pru Nifty Next 50. Keep the rest in liquid or ultra short-term funds and withdraw the money when needed.
Vidya Bala, Co-founder, Primeinvestor.in replies: You are looking at an annual return (IRR) of 12%. This is a stiff target unless you allow your money to grow without yearly withdrawals and invest substantially in equity funds. However, it’s not possible to deploy large sums in a volatile asset class like equity if you have nearterm cash flow requirements. Our suggestion is that you invest 50% in quality equity funds such as Mirae Asset Largecap, Parag Parikh Long Term Equity and ICICI Pru Nifty Next 50. Keep the rest in liquid or ultra short-term funds and withdraw the money when needed. Allow the equity to grow for at least 5-7 years.
I am 83 with no pension. All the money I got at the time of retirement was invested in term deposits in nationalised banks. Recently, I read that if any bank goes into liquidation, then only up to Rs 1 lakh is insured and the rest can be lost. Do you think the Senior Citizen’s Savings Scheme is safer? How should I keep my money? I have no other income.
Ankur Choudhary Co-Founder and CIO, Goalwise replies: Senior Citizen’s Savings Scheme (SCSS) is backed by the government and the entire amount is protected. However, you can deposit a maximum of Rs 15 lakh only (Rs 30 lakh between you and your wife). Two other popular government-backed savings options are the Post Office Monthly Income Scheme and NSC. In the first option, you can have a maximum of Rs 4.5 lakh in a single account.
There is no maximum limit on the National Savings Certificate, but there is a 5-year lock-in and the interest is reinvested, not paid out. In banks, although technically only Rs 1 lakh is protected, deposits with SBI should be very safe for all practical purposes. I would recommend a combination of SCSS (8.6% interest and quarterly payout) and SBI bank deposits.