I am a retired PSU employee aged 66. I have Rs 15 lakh in PPF (extended for 5 years in 2020), Rs 8 lakh in shares, Rs 6 lakh in equity mutual funds and Rs 22 lakh in bank FDs. The marriage of my only daughter is about 12-15 months away for which I need Rs 22-23 lakh. How should I liquidate my investments?
Raj Khosla, Founder and Managing Director, MyMoneyMantra.com, replies: You should start booking profits and initiate a Systematic Withdrawal Plan (SWP) from your investments in shares and equity mutual funds. Keep this money in a savings account or very short term bank fixed deposits. This corpus can be used for your daughter’s wedding. Liquidate other FDs as per maturity date or cash requirement. The corpus in PPF account should not be touched. It is important to ensure capital protection of your savings and investments. So, continue investing in FDs and PPF for a secure monthly income and contingencies.
I earn a pension of Rs 44,000 a month. I have invested Rs 15 lakh in SCSS, Rs 14 lakh in liquid funds and Rs 23 lakh in the following debt funds: ICICI Prudential Short Term Fund (Rs 4 lakh), Aditya Birla Sun Life Corporate Bond (Rs 3.5 lakh), HDFC Corporate Bond Fund (Rs 3.5 lakh), HDFC Short Term Debt Fund (Rs 3 lakh) Axis Short Term Debt Fund (Rs 3 lakh), Kotak Short Term Bond Fund (Rs 3 lakh) and Axis Banking Banking and PSU Fund (Rs 3 lakh). I have Rs 10 lakh in my savings account. I want to protect the corpus. Am I on the right track?
Sanjiv Bajaj, Joint Chaiman & MD-Bajaj Capital, replies: To select the best debt funds, it is necessary to consider some important parameters such as average maturity, modified duration, credit quality, interest rate scenario, AUM, current yield, investment horizon and risk appetite. Your existing portfolio is spread across Banking & PSU, corporate bond, liquid, short duration funds and small savings schemes. Liquid fund exposure can be switched over to medium duration and floating rate funds equally. Axis Strategic Bond Fund, Kotak Medium Term Fund & Nippon India Floating Rate Fund. Half the total savings can be invested in ICICI Prudential Asset Allocator FoF & Kotak Balanced Advantage Fund. These dynamic asset allocation funds enjoy the flexibility in terms of asset allocation between equity and debt instruments depending upon the market situation. This strategy strikes a balance between risk and returns with lower drawdown than an equity investment and higher return than a debt investment. This way your entire portfolio will be diversified across asset class, category, scheme & AMC. Review your portfolio once in a year.
