Debt Funds: Smart Retirement Play for Steady Payout

Ojas is not someone who is ever perturbed. His friends regard him as cool and unflappable.

- SURESH SADAGOPAN

There's a certain edge to him, a swagger that makes him stand out.

Ojas is in sales and has been a top performer for most of his illustrious career, which is coming to a close. He has some investments but hasn't paid much attention to his personal finances. His elder brother, Tejas, has been managing his investments.

Once he retires, he will need a regular income to meet his expenses. Tejas has told him about several options such as fixed deposits (FDs), bonds, non-convertible debentures (NCDs), the Post Office Monthly Income Scheme, and the Senior Citizen Savings Scheme, through which he can earn a regular income in retirement. These all looked like good options to Ojas.

While having lunch with his colleague, Arpit, Ojas discussed plans for earning a regular income in retirement. Arpit told him that withdrawing money regularly from mutual funds was one way of doing so, adding that it was a tax-efficient and flexible option. Ojas learned that this method was called systematic withdrawal. Arpit suggested he learn more about it from his financial advisor, Narasimhan.

Understanding systematic withdrawals