From time to time I get queries from my Blog readers that will resonate with the larger investor community. One such query was sent by a reader recently after he read my recent posts on retirement corpus structuring. I wanted to address it as a post here.
His query was as follows:-
- Take the 60 lacs from PF and gratuity and put in in Vaya Vandana Yojana and Senior Citizen Saving Scheme. This will have to be done by the investor and his spouse separately. This will give 4.8 lacs per year as interest.
- Use 20 lacs PPF to withdraw 2.2 lacs every year for the first 10 years. Along with the interest, this will take care of the 7 lacs needed in the first decade.
- When the LIC money becomes available, invest it in equity balanced funds. This will amount to 50 lacs by 2028, assuming a return of 12 % annually.
- In decade 2 the average expenses will be 14 lacs. This will be funded through:-
- 4.8 lacs will be available as before.
- 50 lacs from Balanced fund will be redeemed @ 5 lacs per year.
- 60 lacs MF will become 1.8 crores in 10 years with a return of 12 % annually. Take 40 lacs and put it in some hybrid fund such as MIP or Equity Savings Funds. 4.2 lacs each year can be used for the remainder of 14 lac expenditure.
- In deccade 3 the average expenses will be 28 lacs. This will be funded through:-
- Stocks which will reach a value of 1.93 crores in 20 years
- MF which will reach a value of 4.34 crores in 10 years from 1.4 crores base.
So at the end of 3 decades the couple will still have some amount left, which can last them a few more years. It is highly improbable that they will live beyond 95 years, so it is a very safe plan.
I hope the plan addresses the issue at hand. In case there are any queries on this, I will be happy to address the same.