Your Financial Plan



I am 63, retired. My wife is 56. I was under the impression that I could live comfortably with my pension. But it has become a challenge over the last five years. Although I live in a tier-II city, my monthly expenses are rising because I travel frequently to Chennai by car. Do let me know if it is good to invest in mutual funds to boost my income.

Ramasamy

Fixed deposits will not help you beat inflation.

If you had planned your retirement early, you would not be worrying much now. Since your children are settled abroad and financially well-settled, I suggest you rethink your plans regarding real estate. As inflation keeps growing, you will face a big shortfall over the years.

Sell your plot and invest in financial assets such as bonds, fixed deposits and mutual funds. Assume you have to pay capital gain tax of ₹5 lakh, you will still be left with ₹45 lakh. Follow asset allocation of debt and equity at 60:40 respectively you will able to earn 9 per cent return. It means your monthly income, post-tax, will be ₹30,000, exceeding your requirement.

In mutual funds, invest only in balanced funds, that will help you earn at least 12 per cent tax-free return. Instead of dividend option, use systematic withdrawal plan to meet your monthly expenses. Book profits when the market delivers far superior returns.

With your monthly surplus, build an medical emergency fund for ₹5 lakh. If you plan your finances better, longevity will not become a threat.

The writer is a registered investment advisor and founder, myassetsconsolidation.com Send your queries to blinefp@gmail.com

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