I am contemplating taking early retirement now at 53 years of age. I will be drawing regular pension ₹38,000. l will be having a corpus of ₹90 lakh out of which ₹15 lakh is invested (through SIP) in ABSL Focussed Equity, HDFC Hybrid Equity, Mirae Asset Emerging Blue chip, Motilal Oswal Multicap 35, SBI Bluechip, TATA Large cap, ABSL Pure Value, SBI Focussed Equity, HDFC Top 100 and L&T Midcap (All are direct scheme, growth plans). My daughter's marriage is coming up in 2-3 years. I will be availing of an education loan for my other child for professsional studies. Please suggest investment options for my immediate goals, regular income generation and protection against inflation. I do not have any EMIs. Please also suggest revision in my asset allocation in above mentioned funds and what percentage of SWP would be suitable for me.

D Mazumdar

You have not mentioned the corpus requirement for your daughter’s wedding. Hence, we are giving broad guidelines on how to go about it.

For a 2-3 years timeframe, short-duration debt funds may meet your requirement. But debt funds are not entirely risk-free as they are subject to interest rate risk and credit risk. If you have the appetite, you can consider high-credit-quality funds such as IDFC Bond Fund - Short Term Plan and Canara Robeco Short Duration Fund. Keep in mind that you can enjoy the benefit of long-term capital gains tax on debt funds only if you hold at least for three years.

If you wish to stay safe, spread your investments across fixed deposits in various banks. Since rates are at a low now, a one to two-year time-frame is ideal. Two such options that we recommend are 1-2 year deposits from Equitas Small Finance Bank and DCB Bank. These banks offer reasonably good rates in the current scenario and also score on financial parameters.

For regular income generation, since you are contemplating retiring at 53, safe options such as Senior Citizens Savings Scheme (SCSS) and PM Vaya Vandhana Yojana (PMVVY), which offer good returns are out of bounds. You can consider RBI Floating Rate Savings Bonds though, if half-yearly interest payouts suit you. Interest rates on these bonds move with the market and is pegged at 35 basis points above the NSC. It now offers 7.15 per cent return. The tenure is seven years and there is no maximum investment limit.

You can park a portion of the corpus here and can move it to the SCSS and PMVVY when you turn 60 , as they fetch payouts at more frequent intervals than the floating rate bonds. FDs that offer regular payouts are also an option. But you need to be nimble on your feet to make the best of interest rate changes to get more bang for the buck.

Long-term returns from mutual funds do beat inflation and it is good that you have about ₹ 15 lakh invested in mutual funds. As you have mentioned, SWPs (Systematic Withdrawal Plans) in mutual funds are another option to supplement your regular income needs. How much you will need to withdraw through SWPs will be based on how much more you will need for monthly expenses aside of your pension and regular payouts from fixed income instruments.

You have invested in categories such as large-cap ( Tata, SBI Bluechip, HDFC Top 100 ), large- & mid-cap ( Mirae Emerging Bluechip), mid-cap (L&T), multi-cap ( Motilal Oswal), aggressive hybrid (HDFC Hybrid Equity), focused (from ABSL and SBI) and value (ABSL). Your choice of funds reflect a moderate-to-high risk appetite. There is scope for some changes here before you set up your SWPs. You can move the corpus in Tata Large Cap and HDFC Top 100 to a Nifty or Nifty Next 50 index fund instead. Redistribute investment in ABSL Focused and L&T Midcap among large-cap /index / hybrid category funds that you hold.

Have only about 20-25 per cent allocation to equity funds post retirement. The remaining corpus can be in fixed income instruments as discussed above.

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