Origin of the post is in E-mail received by one of the blog reader.
The reader is recently retired and want to know how to invest Rs.10 lakh received post retirement,,for period of next 05 years.We will assume that we won’t be in need of this money for next 05 years and at least principal amount need to be protected.
We will take a view of how Rs.10 lakh can be invested in different ways,apart from plain fixed deposits.
- Combine Deposits and Equity mutual funds:Invest Rs.10 lakh in deposits with monthly interest payouts and reinvest this interest in good diversified equity mutual fund.This will ensure safety of the original principle and reinvested amount will be at risk only.
Suppose if Rs. 10 lakh invested in deposits of IDBI bank [ period of 5 years and interest rate of 9%] then monthly interest received will be Rs.7444/-.If this interest is reinvested in equity mutual funds through SIP then chances of the improvement yield will be higher.
Combine Bank & Company Fixed deposits / Debt Funds:
Not all company deposits are bad..About 20% exposure in company deposits can help to improve overall yield.
Bank Deposits: 9% – 75%.
Maturity value of Rs. 7,50,000/- will be around Rs 11,70,000/-.
Company deposits: 25%.
Suggested Company Deposits:
| Company Name | Interest rate |
| Shriram Transport Finance | 10.75% |
| Mahindra Financial Services | 10.25% |
| HDFC Platinum Deposits | 9.40% |
| DHFL | 10.50% |
Exposure in Debt Funds:
Its also possible to have 20-30% exposure in debt funds.It will also help in taxation Point of view.
- ICICI -Prudential Income Opportunities.
- Templeton India Income Opportunities.
- Reliance Regular Savings – Debt Fund.
- HDFC Medium Term Opportunities.
Finally , all depends on risk appetite of investor and other factors like income stability and other responsibilities…more stable is the income,one can take risk to optimize the returns.
