I retired at 60 with a corpus of ₹4.3 crore and my monthly expenses are ₹2 million. With a life expectancy of 85 years, how can I invest to maintain stable income while preserving my corpus? I’m considering real estate, high dividend stocks, and systematic withdrawal plans (SWP). How can I diversify to balance growth, risk and capital protection? How much should I allocate to safe instruments like fixed deposits (FDs) or bonds, and how much should I allocate to growth assets like stocks and real estate for long-term sustainability?

—Name withheld upon request

Investing for post-retirement is a very important exercise and can be more effective if you plan for it. At this stage, we need to take into account the real growth rate of different assets and portfolios whose returns are adjusted for inflation. At the same time, investing money in different asset classes can help you generate better returns and diversify.

Usually, the overall corpus can be invested in multiple avenues and withdrawals can be planned over 25 years. If we assume inflation of 6% per year for the post-retirement phase and we divide the investment into three categories: debt, hybrid and equities, then an investment of ₹3.65 crores will take care of your goal after retirement.

The breakdown is as follows: Invest ₹50 lakh in debt securities to cover withdrawals for the first two years. Allocate ₹1 crore to hybrid mutual funds (MFs) for withdrawals in the next two years and last four years (21st to 25th year), for a total of six years. For the remaining 18 years, invest ₹2.25 crore equity instruments to generate above-inflation returns on your withdrawals.

The returns assumed to calculate the investment amount are 5% for debt, 7% for hybrid and 10.50% for equity. Inflation must be considered as ₹A withdrawal of 2 lakh per month in the first year with inflation of 6% per annum will be ₹3.37 million.

With this increase in withdrawal amount, the invested corpus must grow at a higher rate. Therefore, a significant equity investment will be required. Considering that you have an existing corpus of ₹4.3 crore, investing in these tranches for regular withdrawals should be feasible.

Investing in real estate will require a higher amount from your corpus, and at the same time, it will also have limited liquidity. The growth rate of real estate is also subjective and depends on several factors.

Therefore, you can consider all these points before diversifying into real estate. Ideally out of ₹4.3 crores you need ₹3.65 crores to take care of your withdrawals after retirement considering inflation of 6% per annum.

You will still have ₹75 lakh, so, a certain amount can be invested in a fixed deposit from an emergency perspective, and you can also consider investing in a senior citizen savings plan, which will help you maintain a certain allocation of debt. For stock investments, you can consider investing through stock mutual funds.

—Harshad Chetanwala, co-founder, MyWealthGrowth.com