Where should I invest Rs 1 crore to get monthly income of Rs 1 lakh? (2024)

I am a retired businessman, aged 65. I have Rs 1 crore to invest after fulfilling all my obligations. My goal is to preserve the principal while generating a monthly income of Rs 1 lakh. With a medium risk appetite, I plan to remain invested for 15 years or more. Please suggest the avenues I can invest in.

Prableen Bajpai, Founder, FinFix Research and Analytics:

A monthly income of Rs 1 lakh, or Rs 12 lakh annually, requires 12% return on the invested corpus. However, to ensure a stable retirement income, you need to take into account the following: fixed-income products seldom offer such high rates; preserving the purchasing power of your invested corpus over time is crucial; inflation-adjusted income is necessary to account for inflation’s impact on household expenses, and tax implications must be considered. Given your comfort with moderate risk, consider investing in two hybrid funds and opting for a systematic withdrawal plan (SWP). Balanced advantage and multi-asset funds typically yield 10-12% long-term average returns, offering a mix of equity, debt and gold. SWP benefits include reduced tax liability on principal withdrawals, favourable taxation compared to fixed-income products, and potential positive real returns over time despite equity exposure. Assuming Rs 1 lakh monthly withdrawal, `1 crore corpus could last 15 years with 10% return. Adjusting for a 6% inflation, the corpus may last nine years with increasing withdrawals. To ensure sufficient funds for 15-18 years, reduce monthly withdrawals to Rs 60,000-70,000. Additionally, prioritise health insurance and an emergency fund.

I’m planning to retire with Rs 11 crore in a year. I’m investing Rs 10 crore in equity funds, with Rs 7 crore in large-cap funds and Rs 1.5 crore each in mid- and small-cap funds. I’m also withdrawing Rs 2 lakh a month from mutual funds for expenses and vacations. I invest Rs 1 crore in stocks as I’m comfortable with risk. I have a minimum 10-year horizon for mutual funds. I have Rs 20 lakh health insurance, but my wife is uninsured. I don’t have debts or major expenses for children’s education. My wife earns Rs 1.25 lakh a month and puts half in the Provident Fund. I estimate her retirement corpus to be around Rs 1 crore. She will continue contributing Rs 50,000 a month for expenses. She will retire in seven years with a pension of Rs 50,000. Will this approach work and help leave substantial funds for my children?

Prableen Bajpai, Founder, FinFix Research and Analytics:

Personal finance and investing hinge on individual needs, preferences and risk tolerance. However, adhering to basic principles is crucial. If you’re comfortable with highrisk investments, allocating 100% to equities via mutual funds and stocks leaves no buffer zone. At nearly 60 years old, the rule of thumb dictates a 40% equity allocation, much lower than your planned allocation. Considering various approaches, earmark 25-30% for fixed income and the rest for equities across different buckets. Regular inflation-adjusted income during retirement should be the top priority. Use large caps for SWP (systematic withdrawal plan) and incorporate a hybrid fund to mitigate volatility. Allocate around `5 crore for expenses based on moderate return expectations. Create a fixed-income bucket with RBI Floating Rate Bonds for income generation, and debt funds, including target maturity funds, for managing expenses during market volatility. Reserve Rs 50 lakh for medical emergencies and unforeseen needs in low-risk options like fixed deposits, liquid funds or arbitrage funds. Allocate the remaining corpus to growth bucket, comprising a mix of active and passive funds across market caps and direct equity for long-term growth and future needs. Plan your wife’s corpus allocation at retirement for a clearer portfolio positioning. Prioritise fund sufficiency during retirement over creating wealth for the next generation. Plan realistically, assuming achievable returns.

I am 47 years old and earn Rs 1.5 lakh a month, while my expenses are Rs 40,000. My monthly investments include Rs 40,000 in VPF, Rs 15,000 in NSC (Rs 30 lakh corpus), Rs 10,000 in NPS Tier I (Rs 9 lakh; planning Rs 10,000 more), Rs 20,000 in NPS Tier II (Rs 2.4 lakh), and Rs 1.5 lakh yearly in the 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, lacking sufficient exposure to equity. While fixed-income options like the PPF and NPS offer tax benefits, they may not provide inflation-beating returns. Section 80C allows you to claim tax deduction on PPF contribution up to Rs 1.5 lakh per financial year, and an additional deduction of Rs 50,000 per financial year on NPS contribution under Section 80CCD(1b). I would not recommend going overboard with your NPS (especially Tier II) and VPF investments. Consider diversifying in equity mutual funds through SIPs for wealth creation and inflation protection. Assuming retirement at 60 with a monthly expense of Rs 40,000 (projected to be Rs 96,000 with 7% annual inflation), you’ll need a corpus of Rs 4-5 crore by 60, considering a life expectancy of 85, 7% inflation, and 5% returns. Your current investments may fall short. Redirect some funds from fixed income to equity mutual funds via monthly SIPs of Rs 50,000-60,000, aiming for a combination of flexi-cap, focused, and mid-cap funds. Consider allocations 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 dynamic asset allocation funds, blending equity and debt for lower risk. Adjustments like these can help bridge the gap and build a substantial retirement corpus.

I’m a retired defence officer, aged 71, and my wife is 67. My pension covers our monthly household expenses. I have financial assets totalling Rs 2 crore. While I haven’t opted for medical insurance due to defence services support, I’m reconsidering due to potential private treatment needs for critical illnesses. Would it be advisable to opt for medical insurance now?

Sarbvir Singh, Joint Group CEO, PB Fintech:

Relying solely on employer cover is risky as it may limit hospital options and leave gaps in specialised care. Personal health insurance offers freedom and control, crucial for seniors facing rising medical costs. Previously, individuals above 65 years faced challenges in buying health insurance. Fortunately, the Irdai’s recent decision to remove the age cap on purchasing health insurance offers new opportunities. Industry advancements are also tackling previous limitations like compulsory co-pay and long waiting periods, making insurance more accessible to seniors. Modern senior citizen plans cover conditions like diabetes or hypertension from day 1. Recent developments also ensure that the cumulative bonus remains intact after claim, with minimal co-payment or sub-limits. These plans offer flexibility with outpatient department (OPD) coverage, meeting evolving healthcare needs. I recommend exploring these options and purchasing a personal health insurance plan with a high sum insured for comprehensive coverage and peace of mind in retirement.

Ask our experts

Have a question for the experts? [email protected]