Retirement plan for a 59 year old NRI. Soon! Returning to India

Hi, In continuation to our discussion on emails... As suggested, the dividends from mutual funds are not guaranteed. I can observe that you have shortlisted balanced funds and MIPs for your Corpus investment. You may trim down your portfolio. Investing in funds from the same fund category may not may be beneficial, as there can be higher portfolio overlap. If the overlap is not too significant then its ok to have them in your portfolio. Read: http://www.relakhs.com/mutual-fund-portfolio-overlap-comparison-tools/ http://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/ http://www.relakhs.com/top-best-balanced-mutual-funds-returns/ http://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/ May I know your age?? Are you a senior citizen? Do you have health insurance cover? Kindly use the calculator available in the below article, to estimate your required corpus for your goals; http://www.relakhs.com/retirement-planning-calculator-3-easy-steps/ http://www.relakhs.com/calculate-kids-education-goal-amount/ (Kid's education goal calculator can be used for your vacation goal planning purpose).  

Dear Sreekanth Thanks a lot for the superb advise. below mentioned is some further details ,Q.May I know your age?  A. I'm 59 yrs old. I'm NRI, since last 32 yrs & Planning to retire & return back to India by May2017. I already heave my house+ car in India. Now I need monthly income post my retirement from 2cr  net balance. Q.Are you a senior citizen? A.No. Q.Do you have health insurance cover?  A. No. ( we're 2 ( me-59 & wife-52). 2Kids> employed in europe- engr. During job+equity & MF investment (av 12%gain in last 20 yrs), I'm accumulated 2Cr(net balance), which i think should be OK, post my retirement income. I'm looking for the the Tax free dividend income (to avoid income tax) to meet my monthly expenses in India.50,000/pm in 2017+ say 6% inflation/yr. My target is to limit my total annual gain 10 Lacs<<. Yes! Per my watch list from 2006 to 2016(10yrs record) in above funds, I'm expecting minimum 5%~10%Monthly dividends.  On lower side  I'm expecting minimum 75000( monthly average i.e 9 Lacs/yr)  by investing 1.5Cr in above MF. Is it OK to assume minimum75K/pm? I've no idea about insurance co v er / requirement in India?? is it needed for us?? Pls guide. Best regards, Mumtaz wakil

Dear Mumtaz, 1 - Health insurance : You may consider buying a health insurance plan for self & spouse, once you are in India. You can opt for a Senior citizen health insurance plan (60 years in 2017). Read: http://www.relakhs.com/nri-buy-health-insurance-india/ http://www.relakhs.com/best-health-insurance-comparison-websites-portals/ http://www.relakhs.com/top-up-health-insurance-plans-super-top-up-india/ 2 - Europe Trip : As these are recurring expenses, you may consider investing in an Arbitrage Fund for just over 12 months, as the gains from arbitrage funds are tax-exempt if the units are redeemed after 12 months. These funds can give returns of around 7 to 8%. (You may consider debt fund/ MIP fund/ BankFDs/RDs, but the gains are subject to taxes) To begin with you can invest Rs 3.8 Lakh in an arbitrage fund and can redeem after 1 year, can get Rs 4 Lakh. Read: http://www.relakhs.com/best-arbitrage-funds-returns/ 3 - Assuming life expectancy as 80 years, @8% returns, @6% inflation, Rs 2 cr can give you yearly income of around Rs 9.5 Lakh. As mentioned, the dividend income from mutual funds may not be fixed. So, you may plan your MF investments accordingly. The balanced funds are good ones. You may consider Post office Senior citizen scheme or Post office MIS scheme too . You will get periodic and regular income. But the income is taxable. The investments in Sr citizen scheme can be claimed as tax deduction when filing income tax return in India. Read: http://www.relakhs.com/list-of-best-investment-options-schemes-in-india/  

Let's understand the dividend history of Tata balanced fund - Regular plan - Monthly dividend option, so that you will be in a better position to plan your MF investments. The average monthly dividend declared by this Scheme is around 44 paise per Unit.  The latest NAV of this scheme is around Rs 68, so if you invest say Rs 1 Cr in this fund, you will get around 1,47,058 Units. So the expected monthly dividend income can be around Rs 64,000. Do note that dividend income which is more than Rs 10 Lakh pa is subject to taxes.

Dear Sreekanth, Thanks a lot the advice. I will follow it. Br, Mumtaz

Dear Mumtaz, In my previous reply, I have mentioned that dividend income above Rs 10 Lakh is subject to taxes.  Kindly note that it is not applicable to dividends received from Mutual funds, it is applicable to dividends received on holding Shares/Stocks only. I stand corrected.

Thanks a lot. Therefore, I could increase  my investment in MF-dividends scheme. Per current border situation, could you pls also suggest some safe investment also to get 60/pm from my Retirement corpus of 2 Cr. Br, Mumtaz

Hi, Some of the options which you can consider (safe & fixed income) are; Post office Senior citizen savings scheme (60 years), MIS scheme & Secured NCDs. Read: http://www.relakhs.com/list-of-best-investment-options-schemes-in-india/ http://www.relakhs.com/latest-ncd-issues-2016-2017/