How a pensioner should invest to plan for her child’s marriage
My mother, a homemaker, has been getting a monthly family pension of ₹50,000 ever since my father died a few years ago. When she was 50 years old, she received a lump sum corpus of ₹60 lakh from various sources after tax deduction. She invests ₹10,000 per month in the SBI Bluechip Fund. Now, she is seeking to strike a balance with her corpus, ensuring that it maintains its value while providing a steady source of income. She will require a lump sum amount in 4-5 years for her child’s wedding expenses. Currently, she has no other financial obligations or liabilities.
—Name withheld on request
We will need to make a few assumptions as follows: Her monthly expenses are ₹35,000 per month, marriage expenses needed after five years would be ₹35,00,000 and the lowest tax bracket would be applicable .
Considering the priority is not to lose value and generate a regular source of income, we would suggest a conservative portfolio. We would suggest that the ₹60 lakh can be split in investment buckets of ₹15 lakh each in the following investments: corporate bonds generating 8-9% per annum (p.a.), corporate fixed deposits generating 8-9% p.a., government securities generating 7.5% p.a., liquid/ultra short mutual funds generating 7% p.a.
The income generated from corporate bonds/fixed deposits and government securities would be around ₹27,000 on post-tax basis. There would be a saving of around ₹15,000 from the monthly pension.
In addition to that, there would be a systematic transfer plan from liquid funds to equity and hybrid equity funds. These total to ₹52,000 of monthly systematic investments in the following manner: SBI Bluechip Mutual Fund (ongoing investments)— ₹10,000 at 12% expected returns; Nifty Index Fund— ₹15,000 at 12%
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