1. For a 60-yr retiree, reconstructing his 1 Crore Fixed Deposit (FD) corpus into 50 lakh Hybrid Aggressive Balanced Fund (HABF), 35 lakh Short Duration Debt Fund (SDDF), and 15 lakh Post Office SCSS (SCSS) would be very suitable for 30 years of retired life.
2. His 1 Crore corpus in 7% pa FD is currently providing a monthly income of 58,330 (annual income = 6,99,960).
3. The reconstructed corpus will provide a monthly income of 80,330, i.e. 22,000 per month more, for 30 years of retired life, with the original 1 Crore corpus still remaining fully intact.
4. The monthly computation is:-
50 lakh HABF @12%CAGR= 47,440 (by way of SWP)
35 lakh SDDF @ 8%CAGR= 22,515 (by way of SWP)
15 lakh SCSS @ 8.3%p.a, = 10,375 (by way of interest)
Total monthly income = 80,330 (annual income = 9,63,960)
5. While annual income now becomes nearly 10% of corpus, if retirement expenses can be met with 6-8% annual withdrawal, HABF can grow even more by power of compounding, for enriching bequeathal in his Will (his lesser monthly withdrawal of 15,000 during these 30 years would add another 52 lakh).
6. Additional info:-
a) HABF should be in a top quartile fund (current 18-yr CAGR is 13-15%).
b) SDDF should be 4/5-star rated, annually reviewed, and laddered.
c) SCSS should be renewed if interest rate doesn't plummet considerably.
d) For higher capital protection, 15 lakh SCSS can also be availed in wife's name, if 60 (or when she becomes).
e) For higher risk-related returns, a Multi-Cap Fund (MCF) can be added out of SDDF corpus.
f) Applicable tax benefit sections are:-
SCSS - Sec 80C (investment), 80TTB (interest),
HABF/MCF - Sec 10 (capital gains) (10% after 1 year),
SDDF - Sec 10 (capital gains) (20% after 3 years with indexation benefit).
g) Mutual fund investments should be preferably in SIPs over a period of 1-2 years.
7. A few tips:-
a) For income generation - select a fixed income product like fixed deposits, recurring deposits, SCSS or debt funds depending on their higher returns.
b) For growth generation - invest 40-50% of retirement corpus in Hybrid Aggressive funds or Multi-Cap funds, through equal SIPs.
c) For tax-savings - preferably invest in ELSS funds, by investing amounts needed annually, as long as its tax-saving purpose is fulfilled.
2. His 1 Crore corpus in 7% pa FD is currently providing a monthly income of 58,330 (annual income = 6,99,960).
3. The reconstructed corpus will provide a monthly income of 80,330, i.e. 22,000 per month more, for 30 years of retired life, with the original 1 Crore corpus still remaining fully intact.
4. The monthly computation is:-
50 lakh HABF @12%CAGR= 47,440 (by way of SWP)
35 lakh SDDF @ 8%CAGR= 22,515 (by way of SWP)
15 lakh SCSS @ 8.3%p.a, = 10,375 (by way of interest)
Total monthly income = 80,330 (annual income = 9,63,960)
5. While annual income now becomes nearly 10% of corpus, if retirement expenses can be met with 6-8% annual withdrawal, HABF can grow even more by power of compounding, for enriching bequeathal in his Will (his lesser monthly withdrawal of 15,000 during these 30 years would add another 52 lakh).
6. Additional info:-
a) HABF should be in a top quartile fund (current 18-yr CAGR is 13-15%).
b) SDDF should be 4/5-star rated, annually reviewed, and laddered.
c) SCSS should be renewed if interest rate doesn't plummet considerably.
d) For higher capital protection, 15 lakh SCSS can also be availed in wife's name, if 60 (or when she becomes).
e) For higher risk-related returns, a Multi-Cap Fund (MCF) can be added out of SDDF corpus.
f) Applicable tax benefit sections are:-
SCSS - Sec 80C (investment), 80TTB (interest),
HABF/MCF - Sec 10 (capital gains) (10% after 1 year),
SDDF - Sec 10 (capital gains) (20% after 3 years with indexation benefit).
g) Mutual fund investments should be preferably in SIPs over a period of 1-2 years.
7. A few tips:-
a) For income generation - select a fixed income product like fixed deposits, recurring deposits, SCSS or debt funds depending on their higher returns.
b) For growth generation - invest 40-50% of retirement corpus in Hybrid Aggressive funds or Multi-Cap funds, through equal SIPs.
c) For tax-savings - preferably invest in ELSS funds, by investing amounts needed annually, as long as its tax-saving purpose is fulfilled.