How to Invest 10 lakh for regular income

[surfingminds]

Dear Experts

I have received money through my bothers policy claim (total 10 Lakh), I want to deploy this money in such a way that it is diversified with medium risk and some portion should give regular monthly or quarterly income to support the regular needs of family his wife and 8 months daughter.

I am thinking for a proper combination of FD, MF and small equty with regular incoome option and SIP as well.. following break down
EQuity : 1 lakh
MF : 3 lakh
FD : 6 lakh

m NOT CONSIDERING GOLD at the moment as i personally believe its at very high price. Also m thinking for following products

1. Mahindra finance FD
2. Bank FD
3. Mutual funds a. Reliance Growth,HDFC prudence,Icici Infra,HDFC Top 200
4. Equity : reliance,NTPC,TCS, and some small companies high risk
5. Child Plan to secure future needs of her next 20 years and marraige.


Please advice your views and direction so that i can take best decision.. I am also expecting that atleast 10-15 K Qtly income if possible through the investment..

And looking for good child policy to secure future needs.

 

[palka]

A proper assessment should be made about the monthly/quarterly requirements.
If there is no other major source of income then capital preservation is very important. In that case Post Office Monthly Income Scheme is the most suitable alternative.
If some money is available for investment in equity I would suggest a conservative fund (HDFC top 200) or a balanced fund (Prudence).

Debt schemes should be avoided as: return low compared to post office/FD, return is not secure, ant not regular. One can also loose money in debt funds.

Rs 8L at 8% pa will get you 64K pa , ie Rs 5300 per month.

Some amount should be kept in reserve for emergency expenses as well.

 

[alroyraj]

Dear Experts

I have received money through my bothers policy claim (total 10 Lakh), I want to deploy this money in such a way that it is diversified with medium risk and some portion should give regular monthly or quarterly income to support the regular needs of family his wife and 8 months daughter.

I am thinking for a proper combination of FD, MF and small equty with regular incoome option and SIP as well.. following break down
EQuity : 1 lakh
MF : 3 lakh
FD : 6 lakh

m NOT CONSIDERING GOLD at the moment as i personally believe its at very high price. Also m thinking for following products

1. Mahindra finance FD
2. Bank FD
3. Mutual funds a. Reliance Growth,HDFC prudence,Icici Infra,HDFC Top 200
4. Equity : reliance,NTPC,TCS, and some small companies high risk
5. Child Plan to secure future needs of her next 20 years and marraige.


Please advice your views and direction so that i can take best decision.. I am also expecting that atleast 10-15 K Qtly income if possible through the investment..

And looking for good child policy to secure future needs.

For good interest rate as part of the debt part consider the Post Office monthly income scheme (POMIS) these have a limit of 7.5 lakh per person single and additional 7.5 lakh for joint. This has the hoghest rate.

Monthly Income schemes of mutual funds typically have a monthly interest rate of 0.75% and among the better ones 1% per month. SO consider this.

Other than this mutual fund schemes do not have many options for monthly income There are deby products Templeton has a debt product that is good recommended in this last week SUnday Business Line namely Templeton India Short-Term Income Plan. It has given an interest rate of ~8% pa generally it is the best performer.

Invest in high growth bluechip and high dividend yield companies like M&M, Reliance, Grasim, L&T, Infosys,SBI.

The MF schemes you have selected are fine except for ICICI Infra, choose some good midcap scheme from DSPBR or Sundaram. It spreads risk and has given good returns till date.

Company FDs are good if you go for good rated companies . Also spread the investment in 2/3 compnaies do not put all of it in 1 company FD.

 

[URPradhan]

I'll say park the maximum money you can with POMIS (4.5L single 9L joint) and rest in a diversified equity fund through STP from a better debt fund from the same AMC. As the family needs monthly expense money you HAVE to think of POMIS only, which is the BEST for this situation.

 

[surfingminds]

Thank you guys.. I was very ignorant of the Post office scheme, Also I did some researcho on the Child policies liek LIC and Smart kid from icici it looks they are just another way of ULIP and thier are more hidden charges to it.. so finally i m thinking the allocation based on your inputs kindly review

1. POMIS :4 lakh (reduced allocation as i will also support monthly & their is family pension from a trust)

2. FD Long term : 2 lakh (mahindra 8 pa)

3. MF 3 lakh : SIP for 3 years in (Reliance Growth , HDFC top 200, HDfc prudence, Sundaram mid cap) 10K per month..

4. Equity 1 lakh : Reliance , LnT, Mahindra,TCS , SBI when market corrects only

5. I have taken care of some liquidity so hope that money once deloyed in 20 years multiplies to 40 or 50 lakh worth time to time churning will be done.

 

[URPradhan]

2. FD Long term : 2 lakh (mahindra 8 pa)

I'll suggest you NOT to buy FD from private companies rather search for PUBLIC sector banks with high interest rate.

 

[palka]

If Mahindra Finance gives you 8% why invest in that scheme. Buy KVP instead. 100% security.

 

[yodlee99]

Glad to see that you have come out with a well-thought out plan for your family's finances. A few factors for you to consider:
1) POMIS seems to be the best in your scenario. You can make it even 6L.
Kisan vikas patra is also good for future money needs. http://www.indiapost.gov.in/netscape/Banking.html
Make sure you put signatures legibly, as there are issues in some post offices when signature changes over a period of time and they keep paper records!
Read more as you are parking a major part of your finances there.

2) Don't put more than 10-20K in any private company. People in this forum have mentioned challenges after investing in a AAA-rated company, Dewan housing finance.
3) Remember, best returns come from equity. If you are not tracking frequently, invest via STP into diversified & well-managed funds. For eg, HDFC Top 200, Birla SF frontline equity plan A, DSPBR equity, Reliance regular savings fund. If you want some mid&small cap for even higher returns with more risk, try Reliance growth or idfc premier equity plan A, but you dont have to.

Always set up STP on different dates of the month into a max of 4-5 funds.
Invest only for 12 months now, extend it later.
Wait for atleast for 1 year period before changing your portfolio, if needed.

Forget sectoral funds like ICICI infra.

PS: There are MIS (monthly income schemes) out there... I have never tried it as there is no guaranteed income and u cannot count on a particular amount every month.

Forget ULIPS as they are expensive. Always take term policy for adults with dependents. For kids, invest in diversified & well-managed funds as in point 3) above.

Good luck!

Thank you guys.. I was very ignorant of the Post office scheme, Also I did some researcho on the Child policies liek LIC and Smart kid from icici it looks they are just another way of ULIP and thier are more hidden charges to it.. so finally i m thinking the allocation based on your inputs kindly review

1. POMIS :4 lakh (reduced allocation as i will also support monthly & their is family pension from a trust)

2. FD Long term : 2 lakh (mahindra 8 pa)

3. MF 3 lakh : SIP for 3 years in (Reliance Growth , HDFC top 200, HDfc prudence, Sundaram mid cap) 10K per month..

4. Equity 1 lakh : Reliance , LnT, Mahindra,TCS , SBI when market corrects only

5. I have taken care of some liquidity so hope that money once deloyed in 20 years multiplies to 40 or 50 lakh worth time to time churning will be done.

 

[yodlee99]

One more point that seems to have been left out: income taxes.

 

[HariSeldon]

2. FD Long term : 2 lakh (mahindra 8 pa)

I don;t think locking for longterm FD as this moment is gd idea. Go for 12-18 month Bank FD. Interest rate are going up. in 12 to 18 month you should be able to get better deal for long term

3. MF 3 lakh : SIP for 3 years in (Reliance Growth , HDFC top 200, HDfc prudence, Sundaram mid cap) 10K per month..

Are you investing in MF from same corpus? Them why SIP. And though not gd strategy but wait for mrkt to cool dwn a bit.

4. Equity 1 lakh : Reliance , LnT, Mahindra,TCS , SBI when market corrects only

I think one other member also said so. Equity required monitoring, tracking. Also I am not sure if return will be much diff between MF and these blue chip comp.

5. I have taken care of some liquidity so hope that money once deloyed in 20 years multiplies to 40 or 50 lakh worth time to time churning will be done.

As you are using MIS for monthly need + some money for emergency it means you have 5l today. To get 40l from this you need 10% rate of return compounded i.e. money doubling every abt 7 years. thats very doable.