MF Query: How to invest Rs 20 lakh at age 65? Should one go for dividend plan or SWP?

Swapan Giri, ET Mutual Funds reader, a senior citizen looking to invest Rs 20 lakh, sought expert advice on the best investment strategy for his situation.

ET Mutual Funds spoke to Aditya Agarwala, Co-founder, Head of Research and Investment at Invest4Edu, who offered a comprehensive plan tailored for low-risk tolerance and steady income.

Retirement planning is crucial for individuals. It ensures a stable and sufficient income post-retirement, allowing you to maintain your lifestyle and meet essential expenses without relying on others.

Agarwala’s recommendation emphasized the advantages of SIP (Systematic Investment Plan) for rupee cost averaging, along with the strategic use of SWP (Systematic Withdrawal Plan), and highlighted top-performing hybrid funds that are ideal for senior citizens.

Query by Swapan Giri: My age is 65 years. I want to invest Rs 20 lakh. Could you tell me how to invest it properly? Should I do a lump sum or SIP/STP for the next 5 years?Aditya Agarwala of Invest4Edu: Considering that Swapan Giri is now a senior citizen, I advocate a low-risk profile with exposure to debt funds, dividend funds, short duration funds, flexi cap funds and hybrid funds to ensure consistent and stable returns.Furthermore, given that the equity markets have already witnessed significant gains over a year and half it is prudent to opt for a SIP for the next 5 years as it will give rupee cost averaging.

As far as investing a lump-sum of Rs 20 lakh is concerned, I would recommend allocating it to funds which allow placing SWP orders.

The Systematic Withdrawal Plan (SWP) is a mutual fund withdrawal technique in which you receive a fixed payout in each withdrawal cycle.

For a monthly payout through SWP, you deposit a lump sum amount in a mutual fund and receive the benefit as fund returns.

Few of the top performing Hybrid Funds which allow SWP are –

1) ICICI Prudential Debt & Equity Fund

2) HDFC Hybrid Equity Fund

3) SBI Equity Hybrid Fund

4) Quant Absolute Fund

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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