How should a senior citizen invest amount received on FD maturity to get monthly income?

My senior citizen father recently received Rs 8 lakh on maturity of an FD. He wants to invest the money to earn an income that will supplement his pension. Please suggest options.
Rahul Parikh CEO, Bajaj Capital replies: For monthly income, consider debt funds that are yielding 6-7% annually. You can opt for a monthly SWP option, which can be up to .50% of your corpus. You can expect approximately Rs 4,000 a month as additional income with capital protection. You can equally divide the Rs 8 lakh in corporate bond and floating rate funds. Consider investing Rs 4 lakh in each of these funds—Aditya Birla Sun Life Corporate Bond Fund and ICICI Prudential Floating Interest Fund.

My mother retired recently and gifted me a chunk of her PF kitty. I have an ongoing home loan. Should I use this money to repay the loan or invest it to increase my savings?
Prableen Bajpai Founder, Managing Partner, FinFix Research & Analytics replies: It's always good to clear one's debts before investing. However, a home loan provides some tax benefits. You have not quantified any figures, so here's a broader check list of the things you should consider while deciding. If having a loan doesn't stress you, then you can do the math to check if it is benefiting you in terms of tax relief. A home loan tenure is structured in a way that in the initial years, a higher percentage of EMI goes as interest payment and with time, the principal component begins to increase.

Thus, the time of repayment is an important factor as it will impact the tax benefits availed under Section 80C and 24 (b). The other crucial variables to calculate the taxation benefit are the occupancy of the house (rented or self-occupied) and loan holding (single or joint). The choice further depends upon your overall financial position, what part of your income constitutes the loan, and so on. Finally, compare the effective cost of loan vis-à-vis the post-tax returns on the proposed investment. If there is no clear winner, go with repayment of loan.