Required suggestions for my father’s retirement amount

POSTED BY Anand Y ON January 23, 2013 10:33 pm COMMENTS (10)

Hi,

My father retired in the last December and he is going to get his retirment amount in the 1st week of coming Feb. I hope it would be around 15 lacs. And he will get pension Rs 6500 /- per month there after. 

 

Can you please suggest me the best way for my father to invest that amount.

 

Thanks,

Anand.

10 replies on this article “Required suggestions for my father’s retirement amount”

  1. Karthik says:

    Hi Anand,

    As you say your father is healthy and if the policy is term plan with less sum assured and if it is going to mature in the next one year or so, why can’t forego the policy and use the 50K for ur investment in FD as Ashal says which will give additional small amount per month or use as an emergency fund?
    I understand it’s risky, but anyhow just a thought for your consideration..

    Thanks
    Karthik

  2. Dear Anand, in this case, there ‘ll be a minor interest loss for not being Sr. Citizen. Rest I already discusssed.

    Thanks

    Ashal

    1. Anand Y says:

      Ashal,

      Thank you very much for your suggestions, which are very much clear.

      Thanks,
      Anand.

  3. Dear Anand, so in effect your father ‘ll be investing 14.5L Rs. only. 5000 Rs. mly translates into 60000 Rs. yly. I assume your father is already 60Y & above old so eligible for Sr. citizen status. Please confirm this thing.

    Out of 14.5L Rs. ask him to invest 7.5L Rs. in 10Y FD of PSU banks (where he already hold an account). The ROI ‘ll be 9% or even more. For my calculation, I’m using 9%. @ 9% ROI his income ‘ll be 67-68000 Rs. yly or 5500 Rs. mly. Please opt for mly interest pay out from this bank FD.

    Now out of this remaining 7L Rs. Invest 4L Rs. in HDFC Balanced fund & final 3L Rs. in Reliance MIP. Please do not redeem any money from these 2 MFs for next 2Y. After 2Y as & when a short fall is there, please liquidate some money as per requirement from Rel. MIP only. Keep HDFC Balanced fund intact for next 5Y.

    The MIP ‘ll provide support against shortfall in the income from here on wards after 2-3 years. The Balanced fund ‘ll provide defense against the devil – Inflation.

    Please share your views.

    Thanks

    Ashal

    1. Anand Y says:

      Ashal,

      Thanks for your suggetion.
      My father age is 58 now.

  4. Dear Anand, is it 50K each month i.e. total 1.5L Rs. or just 50K in total for that prem. payment? Please clarify.

    Thanks

    Ashal

    1. Anand Y says:

      Ashal, it is 50k in total.

  5. Anand Y says:

    Dear FFC & Ashal,

    Thanks for your response.

    My father needs around 50k for next 3months to pay his policy’s last premiums. After that he doesn’t have any policies or loans to pay. My parents are currently living in own house which is loan free. And my father doesn’t have any health issues but my mother has diabetics. They need rs 5000/- per month for medicals like tablets and regular check ups. Hence they need this 5k extra apart from the pension.

    Thanks,
    Anand.

  6. Dear Anand, what’ll be the mly income requirement for your parents? Yes 6500 Rs/ from pension is there but what’s the short fall amount?

    Depending upon this shortfall amount, we may discuss here after.

    Thanks

    Ashal

  7. That depends on how much income your father needs per month. Can he live on 6500 per month for his expenses and how much will you support him with.

    If he does not need this 15 lacs immediately then he should invest at least 25% of it in equity and the rest in safe debt instruments like FDs.

    If he want monthly income from this 15 lac then senior citizen scheme and MIS from PO, tax free bonds are some options.

    A mixture of these two options can also be considered depending on his needs.

    Please ensure he has enough mediclaim cover and increase it each year

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