I am 61 years old. I am retired and have paid back all my loans. I need at least Rs 40,000 per month minimum to maintain my standard of living. I have never invested in mutual funds before but want to do so now. I have Rs 8 lakh as savings. Please suggest some good funds that I can invest in. My risk appetite is low and I want regular returns.
- Suvidha
In view of the size of the corpus that you have (Rs 8 lakh), earning a monthly income of Rs 40,000 appears impossible. You will have to settle for a much lower monthly income. A conservative 9-10 per cent return from a corpus of Rs 8 lakh amounts to a monthly income of around Rs 6,000-6,700.
Keeping in mind your risk appetite and need for regular returns, we would like to suggest three options.
One, you may invest in Monthly Income Plans (MIPs) such as Reliance MIP and L&T MIP that aim to provide income through their investments in debt instruments (around 80 per cent) and rest in equity. They involve risk and the returns from them can also be irregular. However, they could give a higher return than fixed-income instruments. Over the last one, three and five-year horizons, the category average returns from MIPs have been 8.28, 7.87, and 8.80 per cent respectively (June 30, 2010). Second, you may invest in Senior Citizen Savings Scheme (SCSS) that gives a 9 per cent return. A third alternative could be that you split your corpus between SCSS and MIP in the ratio of 50:50, or 60:40 - whatever you are comfortable with. While SCSS will give you a fixed and regular return, an MIP could augment your return (but it will carry some risk too).
This article was originally published on August 10, 2010.
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