My 66-year-old sister has no income and no one to support her after she lost her son. I have decided to sell her flat and move her to a senior living home with a monthly expenditure of Rs 50,000. The sale will leave me with about Rs 1 crore after deducting capital gains tax. How should I invest this amount to generate a monthly income for her?Vidya Bala, Co-Founder, PrimeInvestor.in:
Invest in safe options that give around 7% return. Choose from the Senior Citizens’ Savings Scheme, RBI Floating Rate Bonds, and bank fixed deposits that you can lock in at this rate for five years or more. Considering her age, keep at least 10% of the corpus in a combination of savings bank account and short-term bank FDs so that it can be easily liquidated. This will also be necessary to pay taxes, apart from possible medical needs
I am 40 years old and earn Rs 50,000 per month after tax. I want to retire after five years and start a business. I have around `30 lakh in fixed deposits. I also invest Rs 5,000 per month in mutual funds. I live in a self-owned house. How should I invest to earn `1 lakh per month to cover my living expenses after I retire?Naveen Kukreja, CO-FOUNDER AND CEO, PAISABAZAAR.COM:
You have not shared your portfolio, the estimated post-retirement benefits, and the amount required to start the business. Based on the information shared, it seems impossible to generate a post-retirement monthly income of Rs 1 lakh after five years. Moreover, starting a new business may involve a considerable gestation period before reaching a break-even point. Till then, your portfolio would have to sustain occasional capital infusion. So, you may have to rethink your early retirement plans and post-retirement living expenses. You must save at least 25% of your post-tax income for investment, and then estimate your postretirement expenses, after assuming an inflation rate of 6%. Also, ensure you have adequate insurance and an emergency fund for at least six months. Once you start your business, increase the emergency fund to cover at least 12 months’ expenses to make up for the lower income certainty associated with any business. Your existing fixed deposit portfolio can be used to create your emergency fund
I am a 47-year-old banker. I have Rs 10 lakh in mutual funds (SIPs of Rs 15,000 since 2021) and equity (Rs 8.5 lakh). I also have a PPF corpus of Rs 20 lakh. I have property worth Rs 3 crore with outstanding liability of Rs 90 lakh. Please advise how I can clear my liability in the next 5-10 years to retire early. Should I increase my mutual fund SIPs?Prableen Bajpai, Founder, FinFix Research and Analytics:
You have not provided details about your monthly income, expenses, EMI, health and life insurance. However, if we assume the current household expenditure of around Rs 40,000 per month, you’ll require a retirement corpus of nearly Rs 2.7 crore at the age of 60. This calculation considers 6% inflation, 11% and 6% as pre- and post-retirement returns, and retirement period of 25 years. Your financial assets are around Rs 30 lakh, which calls for focus on investing. At the same time, your huge loan liability cannot be ignored. While clearing debt is usually given precedence over investing, in your case, it would be better to balance the two because your current savings are low. If all the resources are used to repay the loan, you won’t have enough time to build sufficient retirement corpus. For instance, if a contribution of Rs 1.5 lakh is made annually, you will have a PPF corpus of up to `81 lakh in the next 13 years, while your current equity portfolio and SIP will grow to around Rs 91 lakh, assuming 11% returns. An additional SIP of Rs 28,000 a month will be needed reach the assumed target of Rs 2.7 crore. In addition, a buffer fund (equivalent to 12 months of expenses) should be built gradually. The response to your query is based on limited information and aimed at providing a broader structure. Consult a professional for comprehensive planning.
I am 33 years old and earn Rs 44,000 a month. I live in my own house and plan to have a child this year. I invest Rs 15,000 per month in flexi-cap, mid-cap and debt mutual funds, and Rs 5,000 in stocks. I also pay Rs 26,000 a year in life and health insurance. I want to retire at 60 with a decent corpus after securing my child’s needs. How should I proceed?Dev Ashish, Founder, StableInvestor, and Sebi-registered investment adviser:
You are already saving Rs 20,000 a month across mutual funds and stocks. You might also have salary deductions towards the EPF. So, you maintain a fairly high savings rate and this bodes well for the future. Your two major goals are retirement and your (future) child’s higher education. Assuming you are planning higher education for your child that costs Rs 20 lakh today, in about 18 years, it will cost about Rs 94 lakh to Rs 1.12 crore, considering 9-10% inflation. If you invest monthly with 75:25 equity:debt allocation, you would need to start with Rs 11,000-13,500 per month and hike this by 5% every year. In case this isn’t possible, you can start smaller and raise it with an increase in your salary in the future. For retirement corpus calculations, details about PF and NPS, mutual fund corpus, and expenses after retirement are unavailable. Since you are already investing Rs 15,000 in mutual funds and another Rs 5,000 in equities, you can earmark the same for this. You can also channel any incentives you receive to this portfolio. If you have any surplus in your savings account or fixed deposit, set aside at least 6-9 months worth of expenses as an emergency fund.
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Now, let's delve into the concepts discussed in the article you provided:
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Investing for a Senior Citizen's Monthly Income:
Vidya Bala recommends investing the sale proceeds of a flat, around Rs 1 crore, for a 66-year-old sister. The suggested options include:
- Senior Citizens’ Savings Scheme
- RBI Floating Rate Bonds
- Bank fixed deposits with a lock-in period of five years or more.
- Maintain 10% of the corpus in a combination of savings bank account and short-term bank FDs for liquidity, tax payments, and potential medical needs.
-
Retirement Planning for a 40-Year-Old Wanting to Start a Business:
Naveen Kukreja advises a 40-year-old earning Rs 50,000 per month, with Rs 30 lakh in fixed deposits and Rs 5,000 monthly mutual fund investments. Key points include:
- Save at least 25% of post-tax income for investment.
- Estimate post-retirement expenses with a 6% inflation rate.
- Ensure adequate insurance and a 6-month emergency fund.
- Consider the gestation period for a new business and the need for occasional capital infusion.
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Debt Management and Retirement Planning for a 47-Year-Old Banker:
Prableen Bajpai addresses a 47-year-old banker with Rs 10 lakh in mutual funds, Rs 8.5 lakh in equity, a PPF corpus of Rs 20 lakh, and property worth Rs 3 crore with a liability of Rs 90 lakh. Suggestions include:
- Balance clearing debt and investing, considering a low current savings level.
- Gradually build a retirement corpus with a focus on investing.
- Consider a balanced approach to meet both debt repayment and investment goals.
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Retirement Planning and Child's Education for a 33-Year-Old:
Dev Ashish advises a 33-year-old earning Rs 44,000 per month, investing in mutual funds, stocks, and paying for life and health insurance. Key points include:
- Maintain a high savings rate.
- Plan for the child's higher education with a 75:25 equity:debt allocation.
- Allocate existing investments towards these goals.
- Set aside an emergency fund of 6-9 months' worth of expenses.
These recommendations provide a comprehensive guide for individuals with different financial goals and situations. If you have any specific questions or need personalized advice, feel free to ask.
FAQs
The 8-4-3 rule of compounding can be your way to achieve the Rs 1 crore corpus goal. Jiral Mehta, Senior Research Analyst, FundsIndia said that in this strategy, if you invest Rs 10,000 every month, assuming annual returns of 12 per cent, it takes 8 years to reach the Rs 16 lakh maturity amount.
How to invest 1 crore for monthly income? ›
Best Monthly Income Plans You Should Consider
- Senior Citizen Saving Scheme.
- Post Office Monthly Income Scheme.
- Long-Term Government Bonds.
- Corporate Deposits.
- Monthly Income Plans.
- Pradhan Mantri Vaya Vandana Yojana.
- Life Insurance Plus Saving.
- Systematic Withdrawal Plans.
The 8-4-3 rule of compounding can be your way to achieve the Rs 1 crore corpus goal. Jiral Mehta, Senior Research Analyst, FundsIndia said that in this strategy, if you invest Rs 10,000 every month, assuming annual returns of 12 per cent, it takes 8 years to reach the Rs 16 lakh maturity amount.
How much time does it take to save 1 crore? ›
How to make 1 crore in 10 years?
| Monthly Investment | Expected Returns | Time to 1 Crore |
|---|
| ₹27,500 | 20% | 10 Years |
| ₹37,500 | 15% (Mutual Funds) | 10 Years |
| ₹50,000 | 10% (High Intrest FD) | 10 Years |
| ₹65,000 | 5% (FD) | 10 Years |
2 more rowsApr 3, 2024
Key Takeaways. The essential steps to make ₹1 crore in 5 years include setting your financial goals early on, planning your path, investing in Equity Mutual Funds, and doing consistent tax planning. The popular investment options in India include stocks, bonds, ETFs, mutual funds, and ULIPs.
What is the monthly interest on 1 crore? ›
Monthly Interest for ₹1 Crore in Fixed Deposit
| Deposit Amount | Interest Rate (p.a.) | Monthly Interest Payout |
|---|
| ₹1 Crore | 6.00% | ₹50,000 |
| ₹1 Crore | 6.50% | ₹54,167 |
| ₹1 Crore | 7.00% | ₹58,333 |
| ₹1 Crore | 7.50% | ₹62,500 |
11 more rowsPerspective: Nationally: 1 crore places you among the top 1% of wealthiest individuals in India. A 2023 Knight Frank report indicated a net worth of 1.45 crore is the threshold for entering the 1% club. Regionally: The cost of living varies significantly across India.
What if I invest $5,000 in SIP? ›
Calculation of SIP returns
To understand this, let us take an example. A monthly investment of Rs 5,000 for 10 years at an expected rate of return of 12 per cent will earn you Rs 11.61 lakh.
What is the 15 15 15 rule in SIP? ›
What is the 15x15x15 rule in mutual funds? The mutual fund 15x15x15 rule simply put means invest INR 15000 every month for 15 years in a stock that can offer an interest rate of 15% on an annual basis, then your investment will amount to INR 1,00,26,601/- after 15 years.
What is 7 5 3 1 rule in SIP? ›
The 7-5-3-1 rule offers a straightforward blueprint for structuring your SIP Mutual Fund investments. It starts with a solid foundation, encourages diversification across multiple SIPs and asset classes, and incorporates a strategic one-time investment component.
Having 50 crore rupees is a substantial amount of money, and it can certainly provide a comfortable and, to some extent, a luxurious life in India. However, the concept of a luxurious life varies from person to person, depending on individual preferences, lifestyle choices, and spending habits.
Can I retire with 1 crore in India? ›
Supplementing your savings with these income streams can enhance financial stability. In conclusion, while Rs 1 crore may seem to be a substantial amount for retirement, several critical factors such as accounting for lifestyle, inflation, and healthcare expenses must be kept in mind.
Is 20 crore rich in India? ›
According to the Credit Suisse Global Wealth Report 2023, the top 1% of wealth holders in India have a net worth of over 16 crores. This means that having 2 crores would put you in the top 10% of wealth holders in India.
How much SIP should I do for 1 crore? ›
Thus, assuming an annualised returns of 7 per cent from debt funds, an investor would need to invest Rs 1.40 lakh per month through SIP to create a corpus of Rs 1 crore in 5 years.
How much monthly income is enough in India? ›
A decent earning and average salary in India is around INR 3 LPA. If you earn up to INR 25K in a month, you earn a decent salary. Your salary also depends on various factors. Like the industry, you work.
How much interest will I get for 1 crore fixed deposit? ›
8.35% p.a. You can earn more from a 1 crore FD interest if you opt for a cumulative FD. This is because cumulative FD offers you the benefit of compounding, giving interest not only on the principal but also on the interest that gets added to the principal amount periodically.
How to make 1 crore by investing 5000 per month? ›
So, in the first year you start SIP of 5000 per month, and increase it to SIP of 5500 per month in the second year i.e. (Rs. 5,000+10% of 5,000), in the third year it will be Rs. 6,050 i.e. Rs 5,500 + 10% of 5,500 and so on. And assuming an annualized rate of return of 12% you can meet your target corpus of Rs.
What is the best investment to get monthly income? ›
Investing Rs. 5,000 per month opens up several options for generating monthly income. Consider allocating this amount across dividend-paying stocks, real estate investment trusts (REITs), or bond funds, which can provide regular returns.
How much to invest monthly to get 1 crore in 10 years? ›
36,335 per month, you can actually grow your money to Rs. 1 crore in 10 years. At the end of 10 years, you would have invested Rs. 43.20 lakhs as principal and the balance amount will come in the form of returns on the fund.
