My daughter and son-in-law have been residing in the US for the past seven years. They have two sons aged 5 and 3, born in the US. They want to come back to India in 2024-25. They want to invest around Rs 50,000 per month in different mutual fund schemes for their children’s education. Their risk appetite is medium. How should they go about this?
Rushabh Desai, AMFI Registered Mutual Fund Distributor replies: First, they will need to get their KYC (physical) done if they have not got it done already or have not updated their NRI status in it. They need to be in person verified by the AMC, KRA or distributor with all the required original documents. They will also need to fill up a FATCA form and depending on the AMC submit a declaration form while executing transactions. Not all AMCs allow US-based NRIs to invest in their mutual funds in India. Some do not allow online transaction execution. Observing the age of their children and assuming the corpus for their education is required after 10 years, they may select mutual funds from the large and flexi-cap categories. Their portfolio can possess a total of four funds, one active and one passive from each of the mentioned categories. They can invest through SIPs.
I am 52 and had to leave my job recently. I have Rs 1.35 crore in my PF and Rs 40 lakh in my PPF accounts which I have not withdrawn till now. I also have Rs 30 lakh each in my superannuation fund, mutual funds, and an investable surplus. I can sustain myself for six months without drawing on my funds. What is the best way to generate at least Rs 60,000 per month for my expenses from this money?
Prableen Bajpai, Founder FinFix® Research & Analytics replies: You can divide your corpus across four buckets. The first will cater to monthly needs. You will need to invest around Rs 1.6 crore to get a monthly payout of a little more than Rs 60,000 assuming an annual return of 5%. You can invest this sum across debt funds and FDs. In addition, corporate FDs from credible companies can be added. Avoid any lock-ins so you can make changes when interest rates rise. Use Systematic Withdrawal Plans (SWP) to withdraw a pre-decided monthly amount from debt funds. The second bucket is important as it will cater to inflation going forward. These investments should be equity-oriented schemes (index, flexi cap, and hybrid funds) for different time horizons. You can realign your mutual fund portfolio for the same. The third will be your fixed-income portfolio but not for monthly usage. At present, you can even keep some amount in your EPF, although interest will be taxable and eventually shift it to a government scheme such as RBI’s Floating Rate Savings Bond 2020. The fourth bucket is for contingencies, and expenses such as payment of insurance premiums and other miscellaneous expenses. Invest this in easily accessible sweep-in FDs and liquid funds.