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Where should I invest Rs 30 lakh to generate monthly income of Rs 20,000?

I am 47 and have been unemployed for the past three years. I have Rs 30 lakh in savings. How can I invest this money to generate an income of Rs 20,000 a month?
Prableen Bajpai Founder, Managing Partner, FinFix Research & Analytics
replies: A monthly requirement of Rs 20,000 translates to Rs 2.4 lakh a year, which would mean a return of 8% on an investment of Rs 30 lakh. You should split the Rs 30 lakh between a mix of government-backed schemes, mutual funds and corporate fixed deposits. Park Rs 4.5 lakh in a Post Office Monthly Income Scheme. This will earn you 7.6% interest per annum, payable monthly. Invest the second tranche of about Rs 15 lakh in corporate FDs. These offer better interest rates than bank FDs, though the risks are higher.

Select credible companies to invest in. These products should earn you between 8-8.5%, with the option of monthly payout. Invest the remaining Rs 10 lakh in a dynamic asset allocation or balanced advantage fund. The equity element offered by these funds will help your invested corpus grow over a longer period of time. Initiate a systematic withdrawal plan (SWP) of not more than 6.5-7% from the selected fund (around Rs 5,000 per month). At the same time, avoid unnecessary expenditure.

My wife and I are in our 30s and live on rent in Bengaluru. We each save Rs 40,000 per month. We have been regularly investing in PPF. We also invest Rs 16,000 per month through SIPs. We have FDs as well. Where can we invest to get high returns at minimum risk? We are exploring options like NPS, LIC and term insurance.
Adhil Shetty CEO, BankBazaar
replies: Since you have not specified what your financial goals are, I am assuming you are planning for the long term, such as for your retirement. Currently, you are investing 20% of your combined money in mutual funds. It would be wise to increase this amount to 40-50%. This is because long-term investments in equity can yield much higher returns, to the tune of 12-15% annually, and downplay the effects of inflation on your corpus.

You can also do this via NPS or invest directly in balanced funds like ICICI Prudential Asset Allocator Fund or Franklin India Pension Fund. Invest the rest of your savings in a mix of government-backed products such as Post Office Savings Schemes, NSCs and tax-free bonds. Term insurance is not an investment and should not be considered so. It is a protection product and is meant to safeguard your family in case something untoward happens. It is always wise to have adequate term cover, typically up to 10 times your annual salary.
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