I am a 66 year old retired PSU employee. I have Rs 15 lakh in PPF (extended for 5 years in 2020), Rs 8 lakh in shares, Rs 6 lakh in mutual funds and Rs 22 lakh in FD bank. My only daughter’s marriage is around 12-15 months for which I need Rs 22-23 lakh. How do I liquidate my investments?
Raj Khosla, Founder and CEO of MyMoneyMantra.com, responds: You should start making profits and initiate a Systematic Withdrawal Plan (SWP) from your investments in stocks and equity mutual funds. Keep this money in a savings account or in very short-term bank deposits. This corpus can be used for your daughter’s wedding. Liquidate other FDs according to maturity date or cash flow requirements. The corpus in the PPF account should not be touched. It is important to ensure the protection of the capital of your savings and your investments. So, keep investing in FDs and PPFs for secure monthly income and contingencies.
I earn a pension of Rs 44,000 per month. I 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, Co-Chairman and Managing Director of Bajaj Capital, responds: To select the best debt funds, it is necessary to take into account some important parameters such as average maturity, modified duration, credit quality, interest rate scenario, assets under management, current yield , the investment horizon and risk appetite. Your existing portfolio is divided between Banking & PSU, corporate bonds, liquid funds, short term and small savings plans. Exposure to liquid funds can be converted equally into medium duration funds and variable rate funds. Axis Strategic Bond Fund, Kotak Medium Term Fund and Nippon India Floating Rate Fund. Half of the total savings can be invested in ICICI Prudential Asset Allocator FoF & Kotak Balanced Advantage Fund. These dynamic asset allocation funds benefit from flexibility in terms of asset allocation between equities and debt instruments depending on the market situation. This strategy balances risk and returns with a lower drawdown than an equity investment and a higher return than a leveraged investment. In this way, your entire portfolio will be diversified across asset classes, categories, plans and AMCs. Review your portfolio once a year.