Here's one:

(This is a way to keep your money in a money market mutual fund and beacuse
of the way Indian tax laws work, you save about 80% compared to an FD, if
you only take out what you need)

Another is to use "dividend yield" stock portfolios for a 5 year or more
horizon (you could even use a div-yield index ETF but none exist in India).
In the longer term you might see this giving you a much higher return than
an FD. IN which case you'll have some money in a liquid fund for say 5
years, and some money in a dividend yield portfolio. Initially you drain
out from the liquid fund and later the kicker comes from the equity where
the dividend yield will probably be of the order of 10% per year or such.

You can use equity funds too or ETFs for longer term, but it's usually
difficult to convince someone to put their retirement kitty into stocks.

Another way is to buy rental income type of assets, like a house. But in
India this is a PAIN. You get yields of 2% and then they kill you with all
sorts of nightmares like someone forcibly occupying your house etc. Better
to buy a house abroad, in the west I think.

And then there are bonds - there are bonds that give you 10% over the next
10 years, with some good companies. (Hey even an SBI bond is currently at
8.5% till 2026) These may add additional income especially if you are in
the lower tax brackets.

There's other stuff as well depending on how complex you want it to get -
using options to generate income for the really math oriented, or low
priced plantation real estate or so on.

But obviously the simplest is to do a liquid fund, and then a standardized
stock portfolio....

Deepak Shenoy
Capital Mind: Financial Macro and Market Analytics
Twitter: @deepakshenoy

On 16 September 2016 at 16:23, Vinayak Hegde <> wrote:

> On Fri, Sep 16, 2016 at 4:07 PM, Deepak Shenoy
> <> wrote:
> > Now, here's the other thing. If you're planning to build cash flow, don't
> > use FDs. They create taxable income and at large corpuses become very
> > unwieldy. THere are other instruments - I can give you more details if
> you
> > want to explore. These will both save you tax and perhaps create a
> "kicker"
> > income if rates continue to fall (a key risk here - imagine the person
> who
> > did this calculation in 1980 in the US - interest rates of 12% - and
> today
> > the FD rates are like 0.5%)
> Yes. Would be interested to know what are the different alternatives.
> I am guessing bonds
> and Equity mutual funds are one avenue. But I am guessing you have a
> lot more options.
> Thanks
> Vinayak

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