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Personal Finance Queries For The Day (02-09-2019)

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Personal Finance Queries For The Day (02-09-2019)
Vijay Kuppa - 02 September 2019

Prakhar Srivastava, Kanpur: I will be retiring in two years from now and a corpus will be receiving as a retirement benefits. Where I should invest the corpus percentage wise to earn regular monthly with safe returns. Request to answer the question.

The allocation of corpus percentage-wise will majorly depend on the monthly withdrawal required by the individual. In an ideal scenario, we would recommend investing 60% in Liquid funds and 40% in Equity - Largecap Funds. The rationale being that investment in Debt fund will provide around 7 percent rate of return p.a. and will provide funds for systematic withdrawal. Investment in Large-cap funds will provide an opportunity to invest in Indian equities and good quality companies which will provide returns in the range of 11-13% over the duration wherein systematic withdrawal will be taken care by Debt funds and create additional funds over the longer term which can be used for Systematic withdrawal.

Example - With a corpus of 10 lacs and Systematic withdrawal is required of 1.2 lacs / month with 6 lacs invested in Liquid fund and 4 lacs in Equity - Large cap fund. We expect the corpus in Liquid fund to be exhausted in 5-6 years (Assuming 4% inflation) and in parallel Equity - Large cap will generate a return of 11-13% return p.a. on a corpus of 4 lacs thereby providing an additional amount for systematic withdrawal going forward.

The query is responded by Vijay Kuppa, Co-founder, Orowealth

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