How to invest my Rs 2.5 crore retirement fund for a steady monthly income?

These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.

I am 60 with a retirement corpus of Rs 2.5 crore. How should I invest it to generate a steady monthly income and ensure it lasts through retirement? I plan to work part-time for five years, earning about Rs 1 lakh a month, and have no major liabilities.

Dilshad Billimoria MD & Chief Financial Planner, Dilzer Consultants: If your monthly expenses are Rs 1 lakh, assuming a 10% annual return, 6% inflation and life expectancy of 90 years, you would need a retirement corpus of about Rs 2.16 crore. Your corpus is comfortably above the required amount. Since you plan to earn Rs 1 lakh per month for the next five years, it’s recommended that you use the earnings from your consulting work for the next five years.


You may utilise the corpus accumulated so far for medical emergencies, etc. It’s good to have a medical corpus outside of your medical insurance for emergencies. The asset allocation should follow a bucket strategy. The first two years’ expenses (after you stop working) can be parked in an arbitrage fund. The second bucket, meant to fund expenses from the third to the fifth year, can comprise equity savings and hybrid funds for tax efficiency. The final bucket, for needs beyond five years, can be invested in equity.

A Systematic Withdrawal Plan (SWP) can be used to make tax-efficient withdrawals while helping the corpus last through your lifetime and provide for ad hoc expenses.

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When I am nearing retirement, should I stick to monthly income streams from bank FDs or move to an SWP after making a lump sum investment?

Rushabh Desai Founder, Rupee With Rushabh Investment Services: The decision between sticking to bank FDs/debt mutual funds or moving to a systematic withdrawal plan (SWP) in equity/hybrid mutual funds comes down to a classic trade-off between guaranteed income vs tax efficiency and growth. Rather than choosing just one, a combination of both provides the ultimate balance of safety and inflation protection.

An effective retirement blueprint uses both tools complementarily by following the bucket strategy. For this you will need to prepare two investment buckets 1. Immediate income bucket; and 2. Growth income bucket. In bucket 1, put a portion of your retirement lump sum into safe instruments like bank FDs and debt mutual funds and use this to secure your monthly expenses. In bucket 2, invest the remaining larger portion into moderate risk hybrid mutual funds or equity savings mutual funds and let this grow untouched for the first 3 years after which you can start an SWP.

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com