I am arranging my mother’s portfolio and per her request wanted to invest a portion in a monthly income plan (or a systematic withdrawal plan). I am not too much up-to-date with markets in India as i live in US. After some research came across HDFC Balanced advantage fund , about a 1% monthly return. Would you recommend any other plan/fund i should be looking at?
Thanks for your advice.
Despite the presence of debt in hybrid funds, if markets fall, there may not be the expected 1% return. It is better to go for debt products. Better yet, you can consult a registered adviser to create a plan, considering the person’ age.
Check Senior Citizen Saving Scheme. It is not market-linked but offers higher interest than bank FD. Interest is paid out every quarter.
I would definitely not suggest MFs or Equity exposure to a 76 yr old. This age requires a stable fixed monthly income. I would go for long term secured state government bonds or high rated private bank bonds, which offer anywhere between 9 to 11% interest on quarterly or monthly basis. Both offer higher returns as compared to bank FDs or central govt schemes.
If your holding period is longer than a year and your mother is in the lower tax bracket take a look at REIT AND invits
You get fixed income every quarter with equity like ltcg treatment as per new budget rules and some price appreciations of a few percent points depending on interest rate movements
Only downside is distribution is every quarter so you have to manage cashflows
You might have to look a t corporate governance of each REIT before you invest
Unfortunately she is not in the lower tax bracket due to her business. (My mom is a single widow, business is solely in her name, i live in US). We are invested well in REITs due to few transactions. And, as part of her rebalance, i would be looking to pool in a % to INVITs.
Thanks for your suggestion.
@kalidasa - She has a seaparate saving under the Sr Citizen Scheme in 2 POs. What we are doing now, is rebalancing the current equity + MF portfolio, making it simple, move some to debt + SGB and move some to a monthly income plan. Bulk of it will stay invested in equity + MF. My mother understands the risk and the portfolio has done great over the years.
If you sell equity / MF in large amounts, govt will take 10% LTCG tax for the duration after 2018.
Personally I would take the least-change approach. I would do regular partial withdrawal manually on a quarterly or yearly basis as needed, retaining the balance in the existing portfolio.
Please check Parag Parikh Conservative Hybrid Fund. It has Debt+Equity+reits with conservative approach.
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Prof Pattu ( IIT Madras) has written good articles on retirement income options. You can also hire a fee only investment advisor for your mother.
Buy Quant and ICICI multi asset fund. Now is not the time for equity I would rather buy Gold and then buy equity next year end.
