I will retire with Rs 2.25 cr, where should I invest?

I will be retiring soon with approximately Rs 2.25 crore as my retirement corpus. Please suggest me how I can allocate this amount across various investments. I have only one car loan, which will be repaid within the next year. Additionally, I will receive a pension totalling around Rs 45,000 per month, which is sufficient to cover my expenses.

Rushabh Desai Founder, Rupee With Rushabh Investment Services: Since you are nearing retirement, you likely fall into a moderate to conservative risk profile. Based on this, I suggest three investment options for you:

• Dynamic asset allocation funds (DAAFs) with a counter-cyclical or valuation-conscious strategy, ideal for a minimum five-year horizon.
• Equity savings funds with limited equity exposure (15–25%), suitable for a three-year horizon.
• High-quality debt funds, offering the lowest volatility among the three. In terms of volatility, DAAFs are the most volatile, followed by equity savings funds, and then debt funds. Given your regular pension income of Rs 45,000, you may consider allocating a portion to higher equity exposure (DAAFs or equity savings funds) to earn tax-efficient, inflation-beating returns over the medium to long term.

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I am a 45-year-old NRI. I had bought a flat in Navi Mumbai, in 2019, for Rs 85 lakh, and it is now valued at Rs 1 crore. I cleared the home loan in May last year and am currently renting it for Rs 16,500 per month. I’m considering selling the flat by August this year and reinvesting the proceeds in equity funds through a systematic withdrawal plan (SWP) to meet my retirement needs after 11 years. My current expenses are Rs 1.25 lakh per month. I estimate my monthly expenses to go up to Rs 2.5 lakh in retirement due to inflation. Is this a good strategy?

Prableen Bajpai Founder, FinFix Research and Analytics: The current gross rental yield on your property is about 2%. While the property may appreciate over time, selling it, paying the capital gains tax and investing the proceeds in mutual funds is a better option. While Section 54EC bonds can help save capital gains tax, they offer a low 5.25% annual interest, come with a five-year lock-in period, and the interest is taxable. A diversified mutual fund portfolio is more advantageous. An investment of Rs 1 crore over 11 years, assuming 12% annual returns, can grow to about Rs 3.5 crore. During retirement, you can initiate an SWP to manage expenses while letting the remaining investment grow. However, with household expenses expected to double due to inflation, the corpus may not last through your retirement phase. To ensure a secure and comfortable retirement, continue adding to the corpus through SIPs or lump-sum investments.

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