Where can I invest ₹40 lakh for 15 years to get ₹1.25 lakh every month?
Premium- Since you have 15 years to create a retirement corpus, you can invest in equity mutual funds to build your post-retirement corpus
I am 44 years old, and I have a surplus of ₹40 lakh in my account. I want to invest this money to generate a monthly income of ₹1.25 lakhs per month after my retirement at 60. Would you please suggest a mixed portfolio that can help me achieve my goals?
-Name withheld on request
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Since you have 15 years to create a retirement corpus, I suggest investing in equity mutual funds to build your post-retirement corpus (assuming you are not a conservative investor). Invest your surplus of ₹40 lakh in the direct plans of these funds -- Tata Index Sensex Fund or HDFC Index Sensex Fund; Mirae Asset Emerging Bluechip Fund or Parag Parikh Flexi Cap Fund; and Kotak Small Cap Fund or Axis Small Cap Fund -- through (systematic investment plan) SIPs of one year in the ratio of 40:40:20.
Assuming an annualised return of 10%, your equity fund investment would grow to a corpus of about ₹1.67 crore in 15 years. Once you reach your retirement age, withdraw ₹80 lakh from the retirement corpus and invest it in short-term debt funds. Remain invested in equity funds for the rest of your corpus.
Assuming monthly withdrawals of ₹1.25 lakh from the short-term funds and an annualised return of 6%, your investments in short-term debt funds will last for seven years. During these seven years, your remaining equity corpus will grow to ₹1.69 crore. Redeem ₹80 lakh from your equity corpus again to replenish your debt corpus and generate your monthly income. Keep repeating this cycle after every seve years.
Naveen Kukreja is CEO and Co-founder, Paisabazaar.com. Queries and views at mintmoney@livemint.com
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