Recurring deposit to generate monthly pension
We have an article which highlights how to use RD for generating a retirement corpus.
However, we can use RD to also generate a monthly pension.
How?
Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.
Assumptions:
Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.
Thus at the end of twelve months, the monthly outgo will be 12000 per month.
At the end of ten years, for the next one year, you will get a pension of 186201 per month.
One can put this amount in any other long term investment option (like NSC/FD etc) and restart another RD scenario for the next 10 years.
Just my thoughts. Do share if you think there are better avenues.
We have an article which highlights how to use RD for generating a retirement corpus.
However, we can use RD to also generate a monthly pension.
How?
Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.
Assumptions:
- The investor is 30 years old and needs to retire when he/she is 60 years old.
- 10 year RD rate is 8.25%
Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.
Thus at the end of twelve months, the monthly outgo will be 12000 per month.
At the end of ten years, for the next one year, you will get a pension of 186201 per month.
One can put this amount in any other long term investment option (like NSC/FD etc) and restart another RD scenario for the next 10 years.
Just my thoughts. Do share if you think there are better avenues.
Why would a 30 year old with an investment horizon of 10 years be investing in RD? The returns from RD just about cover for the inflation.
ReplyDeleteUsing the SIP calculator available on Value Research Online, I decided to evaluate how some of the flagship Equity Mutual funds in different categories, from well known fund houses had this investment been made in, would have fared. This is what I came up with.
Investment horizon: 31-Mar-2005 to 30-Mar-2015
4 Monthly SIP's of 3000 each in the following funds (all Growth Option)
Birla Sun Life 95 (Balanced Fund) - 363000 became 896913
Franklin Bluechip Fund (Large Cap) - 363000 became 837259
IDFC Premier Equity (Diversified Equity Fund) - starting on 5-Oct-2005: 342000 became 1147959
Sundaram Select Midcap (Midcap Fund): 363000 became 1147185
Total amount invested: 1431000 Value: 4029316