Suppose that you have retired with Rs 1 crore as retirement corpus from various sources. This may look like a big amount, but remember that all your life expenses, including medical bills, insurance, any EMI, and every other outflow will come from that retirement corpus. Hence, you must plan well to invest the retirement corpus so that you can keep earning adequate income from it.

Invest A Part Of Your Corpus To Generate Monthly Income

It’s important to consider investment options that provide a regular and reliable cash flow. You can invest a part of your retirement corpus in assets which provide a regular and stable monthly or quarterly income. Several schemes in the market offer a safe return varying from 7% to 8% pa.

Some of the schemes are Post office monthly income scheme (POMIS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), SCSS, and bank fixed deposits. The interest rates of banks FD vary with banks. The return on the other two schemes (POMIS and PMVVY) is 7.4 per cent, whereas SCSS offers a return of 8.2 per cent per annum.

Start A Systematic Withdrawal Plan (SWP)

If a portion of your corpus is invested in mutual funds, you can start an SWP. An SWP is a systematic withdrawal plan through which you can redeem a fixed amount from your mutual fund investment at regular intervals. SWP offers two benefits; it gives you monthly income; it also keeps you invested for the remaining portion of the investment. However, you must realign your investment portfolio in sync with your risk appetite. Ideally, the corpus should be parked in a debt fund or a hybrid fund with a large allocation to the debt portion. Equity funds are risky in old age as the fluctuation in the market may wipe out the savings.

Other Possible Investments With Some Risk

If you have certain post-retirement financial goals that require a higher return than what’s offered by the debt fund or the fixed deposits (FDs), you may invest a very little portion of your corpus in a large cap equity fund. Equity funds tend to perform well in the long run, so if you expect the other investments as mentioned above can keep you afloat for more than 8-10 years; this can be done with great benefit.

While reinvesting the corpus, keep your risk appetite, return requirement and financial goals in mind. Always diversify your investment into different asset classes. You must keep an adequate portion of the retirement corpus towards meeting contingency requirements. You can invest the contingency fund in avenues like liquid funds or bank FDs.

The author is an Independent Financial Journalist