After careful consideration, I have made the decision to return to India from the US as my father is unwell. At 33 years old, I have approximately 10 crores post taxes in the US that I plan to bring back to India.
I am considering splitting the funds in an 80-20 or 70-30 ratio and investing in low-cost Sensex Mutual funds as well as fixed deposits. My goal is to retire upon my return to India, with an estimated monthly living expense of 1 lakh. I own a fully paid apartment in Hyderabad and my parents are financially independent. I am open to suggestions on a more efficient strategy for managing my finances.
Advice by Rajani Tandale, Senior Vice President, Mutual Fund at 1 Finance
Asset allocation is the practice of spreading your investment portfolio across various asset classes, such as stocks, bonds, and cash. The decision on how to distribute these assets is highly individualised and should take into account your time horizon and risk tolerance. The most suitable asset allocation for you will vary depending on your current stage in life.
Returning to India with a Rs 10 crore corpus and planning for early retirement requires a well-structured and efficient investment approach to ensure financial security and sustainability. Here’s an optimised strategy to make the most of your funds:
Asset Allocation Strategy
Your 70-30 or 80-20 split between equities and fixed deposits is a solid foundation, but a slightly refined allocation can offer better returns and risk diversification:
Equity exposure: 55-60%
> Invest Rs 6 crore in low-cost Sensex or Nifty 50 index funds to benefit from long-term market growth and inflation-adjusted returns.
> Use a Systematic Transfer Plan (STP) over 12-15 months from a liquid fund to gradually enter the market and reduce timing risks.
Fixed Income allocation: 35-40%
> Debt Mutual Funds (Dynamic Bond or Corporate Bond Funds) for long-term stability and tax efficiency or
> RBI Floating Rate Bonds / Government Bonds for secure, relatively better returns than FDs.
Gold Allocation: Around 5%
> Gold ETFs or Sovereign Gold Bonds (SGBs) can act as a hedge against inflation and market volatility.
International Diversification: 5%
> Maintain some global exposure through US ETFs or International Index Funds to hedge against INR depreciation and access global market opportunities.
Withdrawal Strategy
> Your Rs 1 lakh monthly living expense (12 lakh per year) is easily manageable with this corpus.
> A 4% safe withdrawal rate suggests your ₹10 crore portfolio can generate 40 lakh per year, comfortably covering expenses.
> Keeping 30-40 lakh as an emergency fund in liquid assets ensures financial stability for unforeseen situations.
Other Important Considerations
Health & Life Insurance: Ensure you have adequate health insurance in India to avoid unexpected medical expenses. A term life insurance policy can also help secure dependents, if needed.
Estate Planning: With a large corpus, it’s important to create a will or trust to ensure a smooth succession plan and avoid legal complications.
Final takeaway
This is a broad and foundational investment plan based on the available data. For a fully optimised and personalised strategy, it’s recommended to consult a SEBI-registered financial advisor who can tailor the plan to your specific needs, tax situation, and risk profile.
(Views expressed by the tax/investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)