Investment options for you that generate steady after-tax income

I am a 74-year-old widow and recently sold a property for R4-million. How should I invest the proceeds to generate the best after-tax income?

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There are a couple of options open to you and each has its advantages and disadvantages. I will run through two of the most attractive ones and show you the pros and cons of each.

Flexible investment

You can invest your R4-million in a balanced, diversified portfolio and draw a monthly income from it. A 6% drawdown would give you R240,000 a year, or R20,000 a month.

With this route, the money remains yours. You can access additional funds if necessary — for medical expenses, home repairs, family support or unexpected events. And anything left at the end of your life forms part of your estate.

Because the investment stays linked to the market, your income should increase over time if markets continue to grow and your investments are correctly managed. If inflation rises, equities and property in the portfolio generally rise too, helping to maintain your buying power.