Where should I invest Rs 1 crore to earn Rs 1 lakh per month?

To earn Rs 1 lakh per month or Rs 1.2 lakh per year, you need a 12% return on your investment principal. But to ensure a stable retirement income, you need to consider the following: Fixed-income products rarely offer such high interest rates. It is important to preserve the purchasing power of your investment principal over time. Inflation-adjusted income is required to account for the impact of inflation on household expenses and tax implications must be considered. If you are comfortable with moderate risk, consider investing in two hybrid funds and opting for a Systematic Withdrawal Plan (SWP). Balanced advantage funds and multi-asset funds typically generate long-term average returns of 10-12%, a mix of equities, bonds and gold. The advantages of SWP include reduced tax burden on withdrawal of principal, favorable taxation compared to fixed-income products and the possibility of positive real returns over time despite exposure to equities. Assuming monthly withdrawals of Rs 1 lakh, a 10% return would preserve a principal of Rs 1 crore for 15 years. Considering 6% inflation rate, even if you increase your withdrawals, your principal may last for 9 years. To ensure you have enough money for 15-18 years, reduce your monthly withdrawals to Rs 60,000-70,000. Also, prioritize health insurance and emergency funds.I plan to retire with Rs 110 crore in a year. I have invested Rs 10 crore in equity funds, Rs 7 crore in large cap funds and Rs 1.5 crore each in mid and small cap funds. I also withdraw Rs 2 lakh every month from mutual funds for expenses and vacations. I am willing to take risk so I am investing Rs 1 crore in equities. The tenure of mutual funds is minimum 10 years. I have health insurance of Rs 2 lakh but my wife is uninsured. We have no debt and no major expenditure for our children's education. My wife's monthly salary is Rs 12.5 lakh and we are contributing half of it to a mutual fund. I estimate that my wife's retirement pension will be around Rs 1 crore. She will continue to contribute Rs 50,000 per month as expenses. My wife plans to retire in 7 years with a pension of Rs 50,000. Will this approach work and help me leave enough funds for my children?

Personal finances and investments depend on an individual's needs, preferences and risk tolerance. However, it is important to follow some basic principles. If you are comfortable with high-risk investments, allocating 100% to equities through mutual funds and stocks will not leave you with a buffer zone. When you are approaching 60, a rule of thumb is 40% equity allocation, which is much lower than your planned allocation. Consider different approaches and allocate 25-30% to bonds and the rest to equities in various buckets. Regular inflation-adjusted income after retirement should be your top priority. Use large caps for SWP (Systematic Withdrawal Plan) and incorporate hybrid funds to mitigate volatility. Allocate around Rs 50 lakh for expenses based on moderate return expectations. Create a fixed income bucket with RBI floating rate bonds for income generation and fixed income funds with target maturity funds for expense management during market volatility. Set aside Rs 5 lakh for medical emergencies and unexpected needs in low-risk options like fixed deposits, liquid funds and arbitrage funds. Allocate the remaining funds in a growth bucket consisting of a mix of active and passive funds across market cap and direct equities for long-term growth and future needs. Plan wife's capital allocation at retirement for a clearer portfolio positioning. Prioritize capital sufficiency at retirement over wealth creation for the next generation. Plan realistically, assuming achievable returns.

I am 47 years old, my monthly income is Rs 15 lakh and my expenditure is Rs 40 lakh. My monthly investments include Rs 40 lakh in VPF, Rs 15 lakh in NSC (principal of Rs 30 lakh), Rs 1 lakh in NPS Tier I (Rs 9 lakh with another Rs 1 lakh to be added), Rs 2 lakh in NPS Tier II (Rs 24 lakh) and Rs 15 lakh per annum in PPF (Rs 9 lakh). Will these sustain me after retirement?

Rushabh Desai, Founder, Rupee With Rushabh Investment Services: Your portfolio is heavily skewed towards fixed income and does not have enough exposure to equities. Fixed income options like PPF and NPS offer tax benefits but may not give you returns above inflation. Under section 80C, you can claim tax deduction of up to Rs 1.5 lakh per financial year on your PPF contributions and an additional deduction of Rs 5 lakh per financial year on your NPS contributions under section 80CCD(1b). It is not advisable to go overboard with NPS (especially Tier II) and VPF investments. Consider diversifying into equity mutual funds through SIPs for wealth creation and protection against inflation. Assuming you retire at 60 and your monthly expenditure is Rs 40,000 (projected to be Rs 96,000 at 7% annual inflation), considering an average life expectancy of 85, inflation rate of 7% and yields of 5%, you will need a capital of Rs 40-50 lakh by the time you reach 60. Your current investments may not be enough. Redirect some of your money from bonds to equity mutual funds through a monthly SIP of Rs 50,000-60,000 and aim for a mix of flexi cap, focused and mid cap funds. Consider allocation to Parag Parikh Flexi Cap Fund (20%), ICICI Prudential Value Discovery Fund (20%), DSP Flexi Cap Fund (20%), SBI Focused Fund (20%) and Edelweiss Mid Cap Fund (20%). Alternatively, consider a dynamic asset allocation fund that has a blend of equities and fixed income for risk reduction. Such adjustments will help fill the gap and build adequate retirement savings.

I am a 71 year old ex-defence force officer and my wife is 67. My pension covers our monthly household expenses. My financial assets total Rs 2 crore. I have not taken out medical insurance as I am supported by the defence forces but am reconsidering as I may need private treatment in case of a serious illness. Would it be better for me to take out medical insurance now?

Relying solely on employer insurance is risky as it can limit hospital choices and leave gaps in specialized care. Private health insurance offers freedom and control, which is crucial for seniors facing soaring healthcare costs. Previously, individuals aged 65 and above faced challenges in purchasing health insurance. Fortunately, Irdai’s recent decision to remove age restrictions for purchasing health insurance has created new opportunities. Advancements in the industry have also addressed previous limitations such as mandatory copayments and long waiting periods, making insurance more accessible to seniors. Modern senior citizen plans provide coverage for conditions such as diabetes and hypertension from day one. Recent developments also ensure that copayments and sub-limits are kept to a minimum, and that accumulated bonuses remain intact even after claims are made. These plans offer flexibility in outpatient department (OPD) coverage to accommodate evolving healthcare needs. We recommend exploring these options and purchasing a private health insurance plan with a high sum assured for comprehensive coverage and peace of mind in old age.

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