Subbu's Solution

I am interested in investing the retirement corpus. Please advise the funds / scheme with regular cash flow-monthly/quarterly with less/nil tax liability. - S V Gopal
I am glad that people like you are so cautions about their retirement corpus and aim to make the most of it.

However, Mr. Gopal while I understand you might want to save your corpus from tax liabilities, it also becomes more important that those instruments are best suited for retirement. The instruments where you can save your tax like equity mutual fund schemes where long term capital gains (on redemption after a year) from stocks and equity mutual funds are not taxed might have high risk.

Therefore in my view you could invest a portion of your corpus in Monthly Income Plan (MIP). MIPs invest in debt (majority) and equity. Their objective is to offer regular income through periodic (monthly, quarterly or half-yearly) dividend payouts. However, the frequency and quantum of payouts vary according to the returns generated by the fund and the available corpus.


To tide over the uncertainty over dividend payments in MIPs, investors can opt for systematic withdrawal plans (SWPs).

In SWP, you can choose the frequency and quantum of payments. If the scheme fails to generate returns that match the agreed payout, you will be paid from the principal amount. In SWP, the investor is liable to pay short- and long-term capital gains tax.

Other than MIP if you have just entered your retirement you could also look at tax free bonds for 10 yrs, this will help you get tax exemption.

Liquid funds are also good investment options from the point of view of generating regular cash. However they are taxed.

After analyzing your cash flow needs, you could invest just that much in liquid fund which will generate you that cash and the balance can be invested in an equity mutual fund.

Equity mutual funds can be risky – in the sense that the return pattern could be volatile, but it can generate good long term returns.

Your retirement corpus should generate cash for your needs but also needs to grow. Hence a portion of your corpus should be invested in equities.

Moreover I suggest you to consult a financial advisor before making any investment related decisions.


Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

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