Where should I invest Rs 60 lakh with minimum income tax liability?

Your debt portfolio, comprising SCSS, PMVVY, POMIS and FDs, generates about Rs 5 lakh in annual interest income. Now you want to deploy 50% of the incoming Rs 60 lakh for income generation. Assuming an average 7% return, Rs 30 lakh will generate over Rs 2 lakh in annual interest, which will augment the current Rs 5 lakh interest income.

If there is no possibility of increasing the SCSS corpus via your spouse (SCSS limit per person is Rs 30 lakh), you can consider the remaining Rs 30 lakh in a combination of RBI Floating Rate Bonds (FRB) and bank FDs. While FRBs currently offer 8. 05%, the rate may fall when the cycle turns.

For senior citizens, bank FDs will easily offer more than 7% return. So, in the current high-interest rate scenario, it is advisable to lock into these FDs for longer durations. You want to deploy the balance 50% (of Rs 60 lakh) for growth, but you have also said that you don’t want to invest more in mutual funds or shares.

For most investors, growth is best delivered by increasing equity exposure. If you are open to increasing the equity allocation, and adjusting your risk appetite accordingly, consider using Rs 30 lakh for higher equity allocation. It should not be done as a lump sum.

Instead, stagger the amount over the next two years to average out the entry price. For this, you can invest in a combination of large/flexi-cap funds and aggressive hybrid/dynamic allocation funds. If you invest in equity funds, you should be willing to wait for at least 5-7 years to earn decent returns.

The fixed deposit portfolio can act as an emergency or medical contingency fund. While renewing, divide the fixed deposit into several, smaller FDs, so that you don’t have to break one large FD for small requirements. Also, make sure you have adequate health insurance to cover medical risks.

For emergencies, you can park your money in high credit quality, open-ended debt mutual funds from the liquid, ultra-short duration and low duration categories. Your emergency corpus should take care of all your expenses, including medical needs, for up to two years. For your and your sister’s weddings, you have not listed the goal values.

Hence, it will be difficult to calculate how much you would need to invest by 2030. When you arrive at a figure for these goals, factor in inflation of 8-10% for your calculations. Typically, you should save and invest 20-30% of your monthly net income through SIPs in equity funds for the long term.

Investing Rs 2,000 a month for 6-7 years may not be enough. Don’t compromise on your PPF investments and insurance as these are crucial as well. Assuming an inflation rate of 6% and 8% returns after retirement, which can be achieved with some exposure to equity, you will have an adequate corpus to retire and also pass on to your children.

Invest the corpus needed for at least five years of income in safe fixed income options, such as deposits, RBI bonds and gilts. The rest can be put in an asset-allocated portfolio of equity (funds or stocks based on what you currently have) and debt funds, and gold funds, if you already own them. You can systematically withdraw these later to safer options, if required.

This will ensure that your corpus grows optimally to leave a legacy for your children. We assume you have adequate health covers as medical costs tend to rise after retirement. Asset allocation is one of the crucial levers in generating alpha in portfolios, along with market cap and fund manager selection.

You should have an asset allocation plan for retirement based on your goals, circumstances and risk-taking capacity. Considering your retirement corpus of Rs 90 lakh and requirement for a monthly SWP of Rs 50,000, you can consider an asset allocation of 70% debt and 30% equity. This will help your retirement corpus to withstand a 5% inflation rate over the next 20 years and deliver tentative returns of 8% (assuming 6.

5% post-tax return from debt, and 12% post-tax return from equity). For the debt portion, you can consider debt funds, coupon bearing bonds that match your cash-flow dates, or annuity plans. For equity, you can consider a combination of index funds or ETFs in large-cap space and multi-cap funds.

Alternatively, you can invest in balanced advantage funds or a basket of hybrid funds with slightly higher risk, but those that have historically delivered a consistent performance (long-term returns in the range of 9-12%). You can consider the ICICI Muti-Asset Fund, which comes with a higher risk, but has a well-diversified portfolio across asset classes, which can potentially help achieve your financial goals. (Disclaimer: The opinions expressed in this column are that of the writer.

The facts and opinions expressed here do not reflect the views of . ).