I am a 58-year-old businessman, and I wish to invest my FD of around Rs 25 lakh. Please guide on how to invest it such that I get a proper revenue per month. I want to generate an income of around Rs 20,000. Right now, I am getting the monthly interest.
Reply by Adhil Shetty, CEO, BankBazaar.com
If you are a 58-year-old businessman wishing to invest your fixed deposit (FD) amount of about Rs 25 lakh, numerous investment strategies could serve your financial needs as an ageing individual prioritising security and stable returns.
An FD of Rs 25 lakh invested at 7 per cent will give you a bit more than Rs 14,000 a month as interest. For higher returns, you must invest the money for growth before you withdraw an income from it. For the money to not run out, the annual withdrawal rate should be less than the rate of return. For example, if you invested the whole corpus in a balanced mutual fund, returning 10 per cent per annum, your fund would grow to Rs 40.2 lakh in five years. From this, you could withdraw 5 per cent at the start of each year while the rest continues to grow at 10 per cent. This way, the money isn’t exhausted. Your starting income is Rs 2.01 lakh (annually) or Rs 16,775 (monthly) before taxes. If you need higher income, you could consider a more aggressive route—such as a pure equity fund or a higher withdrawal rate—but you must also understand the risks. Thus, investing wisely could help you spend your retirement in peace and prosperity.
Other investing options to note at 60
You could also consider Senior Citizen Savings Scheme (SCSS) pertinent to those aged above 60. It provides quarterly interests and the investment qualifies for tax benefits under section 80C. The current interest rate for SCSS is higher than FD rates, making it an attractive option. Also, consider the Post Office Monthly Income Scheme (POMIS), an ideal scheme for retirees which generates monthly revenue. The interest rate is often higher than most banks’ FDs.
Remember, diversifying investments is a cardinal rule to follow. Speak to a certified financial advisor to understand your risk profile and find an investment intuition that suits your needs. Strategise wisely and modify your financial plan as per your life-stage requirements and market conditions.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)