Investment avanues after retirement

POSTED BY Chander ON August 21, 2011 11:39 am COMMENTS (7)

Hi Everyone,

My father in law passed away in 2010. Now my mother-in-law has inherited his assets which include money for PF and some other sources.

My question here is regarding the cash that she has in hand. How can that money be invested so that she gets a regular stream of money over her life time. She is 54 years old.

The investment options that i know of are

  • Doing FD
  • Take Post Office scheme

Any help in this regard would be highly appreciated.

7 replies on this article “Investment avanues after retirement”

  1. ashal jauhari says:

    Dear Chander, Yes I do agree that Rate of Interest are better in Banks as of now but most of these rates are for odd period maturity say 444 days, 555 days or 590….. For normal maturity durations of say 5Y or 7Y or 10Y, the rates are in the range of 8-9%. Regarding investing the major portion of the money in bank FDs I have no issue. In the prev. reply from my not much info was there from you. hence I advised a generic one. Here I’m agree with dear Ramesh, to get a better solution, please provide more info as demanded by dear Ramesh. A calculated 5-10% exposure in MFs may be taken to get a kick in return as well as to counter Inflation.

    Dear Dominic, please read the basic query again, the lady in question is just 54 years old hence not eligible for Sr. Citizen benefits.



  2. Ramesh says:

    1. How much money does she require on a monthly/yearly basis for her consumption?
    2. Apart from this 30lakh corpus, what are her other assets? eg. own house, etc. Any liabilities which are there on her?
    3. What is the status of her health insurance?

    based upon these, a better advice can be given.

    1. Chander says:

      Hi Ramesh,
      Her monthly expenses are around 25-30K PM.
      Apart from the cash in hand. She has a house on her name @Delhi.
      She does not have any liabilities.
      She would be getting health insurance cover, that would be sponsored by my father-in-laws company (NTPC) for 7 years.


      1. Ramesh says:

        My thoughts and advice:
        1. Considering the longevity (she is 54), you need the corpus to work for her for atleast 85 years. which is about 30 years more.
        2. For such a long period, a predominantly debt portfolio will go on diminishing the total purchasing power. Hence, a proper equity component is a must. Otherwise, in later years, she may need to curtail her lifestyle.
        3. Currently, she has assets of 30 lakh cash equivalent and a house (of unknown worth).

        1. You need a few years consumption money in a capital protection asset class. I would say, keep 3 years yearly expenses in a liquid /short-term debt fund or FD. so 9 lakhs.

        Rest of the money has to be kept in a significantly equity-oriented portfolio. That money can be kept in two parts-

        2. 10 lakhs in 2 conservative debt oriented funds. HDFC MIP-LTP (debt fund with small equity component) and Templeton Income opportunities fund (a large corpus debt fund with reasonable performance). Weightage as you require. i would suggest 5lakhs each.

        3. Rest of the money can be kept in HDFC Prudence (65-75% equity) and Franklin Blue Chip fund (purely equity). Weightage as you require. i would suggest 5lakhs each again.

        All funds to be growth options only, as they are more efficient tax-wise.This way, you have to deal with only 2 fund houses and you can do STP/SWP easily as required. With the suggested partitioning, the equity component is around 28%. I would suggest that as the least which should be done.

        In future, at yearly intervals, you can balance the overall portfolio accordingly. Since there are 4 funds with nearly equal weightage, you can see which asset class has performed better and can remove/balance that amount from one fund to another within the same fund house.

        The house can always be used for Reverse-Mortgage in future.

        A proper financial planner is also advisable.

        What not to do.
        1. Do not have any kind of life insurance (endowment or any other).
        2. No need for any gold investment, in any form.

        Hope this helps you.

  3. Dominic Prakash says:

    You can get a bank FD of 10.00% for SCtzn for 10 Years. Go for it.

  4. Chander says:

    Thanks Ashal for your time and effort.

    She has about 30+ Lacs to invest in. I had looked at this article
    when i was searching for the same.
    Question that I have
    The rate of interest currently provided by banks is better than any other schemes mentioned here or in the article so i am more inclined towards bank FD.
    I am also thinking about suggesting investment of 10% of the money in Mutual Funds.
    Is more diversification needed?


  5. ashal jauhari says:

    Dear Chander, To get a continuous mly income & that too with out any risk of capital erosion, your Mother in law may opt to invest in following options –

    1. Bank FDs – Here you may ask bank to credit interest on mly or qtly basis directly to her bank account. For this option please don’t forget to fill form 15G along with copy of her PAN Card (if it’s not there, avail it right now) to avoid TDS on the interest income.

    2. P.O. M. I. S. – In this option she ‘ll deposit a lump sum amount & for next 6Y she ‘ll get mly amount @ 8% annual interest rates. At the end of 6Y term she ‘ll also get 5% bonus.

    3. LIC’s Jeevan Akshay IV – It’s an immediate annuity plan & within this plan there are many options to chose from based upon individual’s need.

    If you want to discuss in detail, please post your queries here itself. In case you do not want to disclose the amount for general public for the sense of privacy, please ask dear Manish for my mail id & we can discuss it privately.

    I’m not an agent/advisor associated with any insurance or broking co. etc. So whatever we discuss & finalized you w’d have to invest on your own.



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