I am 59 years old with Rs 20 lakh in cash. Where should I invest to generate Rs 30,000 per month?

I am 59 years old and retired from a private company. I currently have Rs 20 lakh in cash, and I do not have any other source of income. I need to find a way to generate Rs 30,000 per month to cover my family's living expenses.

Jagannath

Reply by: Mohit Gang, CEO of MoneyFront, a subsidiary of Niyogin Fintech Limited

Since you are retired and there is no other source of income, this savings of Rs 20 lakh can't be invested in high-yield assets like equity as that could be volatile.

However, expectation of Rs 3.6 lakh annual on Rs 20 lakh of capital (which means 18 per cent return) is little over stretched and not reasonable given that this your retirement corpus and has to be kept safe as well.

Go with 9-12 per cent  range and try to add some other income source to take care of your regular expenses.

Investing it in fixed income like FDs and Senior Citizen Saving Scheme (SCSS) will yield about 8-8.5 per cent returns and which would not suffice your annual requirement of Rs 3.6 lakhs.

Best way to tackle this scenario is to create two buckets. One absolutely safe and one with low to moderate risk which could fetch you 9-12 per cent returns over a long term.

Would advise you to invest in Rs 5 lakh in a Money Market fund and put a systematic withdrawal plan from same for your regular requirements. Keep the withdrawal as low as possible. Assuming the return of 5 per cent it will give you Rs 2083 per month.

Another 5 lakh could be invested in a Medium-term debt fund or Corporate Bond fund. Assuming the return of 6 per cent it will give you Rs 2500 per month.  Instead of debt funds, you can also consider investing in senior citizen FDs or SCSS which is currently giving fixed interest of around 8-8.5%.  

Next 5 lakh could be invested in a conservative hybrid fund with a 3-year horizon to give you slightly better than debt returns. Assuming the return of 11 per cent it will give you Rs 4,583 per month. 

Also read: Tax calendar for September 2023: Don’t miss these important dates

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And last 5 lakh could be invested in a Balanced Advantage fund. Assuming the return of 14 per cent it will give you Rs 4,583 per month. 

This mix will provide you safety cushion of around Rs 15,000 while also give you higher than fixed income returns of your capital.

Funds recommended

-  Aditya Birla Sun Life Money Manager fund

- HDFC Corporate Bond Fund

- Kotak Debt Hybrid fund

- Pru ICICI Balanced Advantage fund

(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)

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