My mother, a homemaker, has been getting a monthly family pension of ₹50,000 ever since my father died a few years ago. When she was 50 years old, she received a lump sum corpus of ₹60 lakh from various sources after tax deduction. She invests ₹10,000 per month in the SBI Bluechip Fund. Now, she is seeking to strike a balance with her corpus, ensuring that it maintains its value while providing a steady source of income. She will require a lump sum amount in 4-5 years for her child’s wedding expenses. Currently, she has no other financial obligations or liabilities.

We will need to make a few assumptions as follows: Her monthly expenses are ₹35,000 per month, marriage expenses needed after five years would be ₹35,00,000 and the lowest tax bracket would be applicable .

Considering the priority is not to lose value and generate a regular source of income, we would suggest a conservative portfolio. We would suggest that the ₹60 lakh can be split in investment buckets of ₹15 lakh each in the following investments: corporate bonds generating 8-9% per annum (p.a.), corporate fixed deposits generating 8-9% p.a., government securities generating 7.5% p.a., liquid/ultra short mutual funds generating 7% p.a.

The income generated from corporate bonds/fixed deposits and government securities would be around ₹27,000 on post-tax basis. There would be a saving of around ₹15,000 from the monthly pension.

In addition to that, there would be a systematic transfer plan from liquid funds to equity and hybrid equity funds. These total to ₹52,000 of monthly systematic investments in the following manner: SBI Bluechip Mutual Fund (ongoing investments)— ₹10,000 at 12% expected returns ; Nifty Index Fund— ₹15,000 at 12% expected returns; hybrid fund— ₹12,000 at 10% expected returns; and debt mutual fund— ₹15,000 at 7.5% expected returns.

The investor would be able to build a corpus of around ₹40 lakh after five years with these expected returns and can use it for marriage expenses.

These are the additional considerations. The portfolio can be adjusted as needed based on the investor’s risk appetite and financial goals. She should review the portfolio on a regular basis to ensure that it is still aligned with her goals. She should consider investing in a health insurance plan to protect herself against unforeseen medical expenses. She should consider working with a financial advisor to help develop and implement a financial plan.

Source By: livemint

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