What’s the best way to generate Rs 10k–20k monthly income for my father without using ULIPs?
Looking for safe investment options after retirement? Here's how to generate Rs 10k–Rs 20k monthly income with low risk using SCSS, FDs, bonds, and mutual funds, without investing in ULIPs.
- Aug 6, 2025,
- Updated Aug 6, 2025 6:19 PM IST
My father recently retired and received Rs 60 lakh as a retirement corpus. Our goal is to generate a monthly income of Rs 10,000–Rs 20,000 with minimal risk, while also setting aside some funds for my wedding, which is expected in about a year.
The bank (SBI) recommended investing in a ULIP, but I’m hesitant due to the 5-year lock-in period. Instead, I’m considering a mix of options like:
Senior Citizens’ Savings Scheme (SCSS)
Fixed Deposits (FDs)
Bonds
A small SIP in a Nifty index fund
Does this combination make sense in terms of balancing income, capital safety, and liquidity? Or is there a better way to structure the investments to meet both short-term and long-term needs?
Advice by Rajani Tandale, Senior VP – Mutual Funds, 1 Finance:
You're absolutely right to be cautious about ULIPs. While banks may aggressively push them for commissions, ULIPs have high charges, a mandatory 5-year lock-in, and returns linked to market volatility—making them unsuitable for retirees needing regular income and flexibility.
A better approach would be a diversified, low-risk income strategy tailored to your father’s goals:
> Senior Citizen Savings Scheme (SCSS)
Invest up to Rs 30 lakh
Offers ~8.2% annual interest, paid quarterly (approx. Rs 61,500 per quarter)
5-year tenure, with early exit allowed post 1 year (small penalty)
Excellent for steady income
> Bank Fixed Deposits (FDs)
Allocate Rs 10–12 lakh in short-term (1-year) FDs for liquidity (like your wedding)
Senior citizen FDs offer ~7.5–8%
Laddering (1-3 years) improves flexibility
> Debt Mutual Funds
Consider short-duration or target maturity funds
Returns around 7–8%, though market-linked
No lock-in, flexible withdrawals
Taxed as per slab (post-April 2023)
> Equity SIP (Small Allocation)
Limit equity exposure to 5–10% (Rs 3–5 lakh)
Use Nifty 50 Index Funds for long-term growth
Not for income, but to beat inflation
> Avoid ULIPs, endowment plans, and PMS products
These products are either too complex, expensive, or illiquid for your father’s current needs.
Understanding ULIPs
Unit-linked insurance Plans (ULIPs) combine life insurance and investment into a single product. A portion of your premium is allocated to life insurance coverage, while the rest is invested in market instruments like equity or debt, managed by professional fund managers. ULIPs offer the flexibility to switch between equity and debt funds based on your risk appetite or market outlook, making them appealing for investors seeking both protection and returns.
Compared to mutual funds, ULIPs have a 5-year lock-in period, while mutual funds offer greater liquidity. One key tax advantage of ULIPs is that switching between funds is tax-free, unlike mutual fund switches, which may attract capital gains tax.
However, ULIPs often lack transparency in terms of fee structure and fund allocation. High initial charges and hidden commissions can erode returns, making them less efficient than mutual funds for pure investment purposes. Investors must weigh flexibility against cost and transparency.
Your current thinking is sound, focus on low-risk, income-generating tools like SCSS and FDs, while maintaining some liquidity for near-term needs. Keep equity exposure minimal and avoid locking funds in ULIPs. Consider consulting a fee-only financial advisor to personalise this further.
(Views expressed by the 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.)
My father recently retired and received Rs 60 lakh as a retirement corpus. Our goal is to generate a monthly income of Rs 10,000–Rs 20,000 with minimal risk, while also setting aside some funds for my wedding, which is expected in about a year.
The bank (SBI) recommended investing in a ULIP, but I’m hesitant due to the 5-year lock-in period. Instead, I’m considering a mix of options like:
Senior Citizens’ Savings Scheme (SCSS)
Fixed Deposits (FDs)
Bonds
A small SIP in a Nifty index fund
Does this combination make sense in terms of balancing income, capital safety, and liquidity? Or is there a better way to structure the investments to meet both short-term and long-term needs?
Advice by Rajani Tandale, Senior VP – Mutual Funds, 1 Finance:
You're absolutely right to be cautious about ULIPs. While banks may aggressively push them for commissions, ULIPs have high charges, a mandatory 5-year lock-in, and returns linked to market volatility—making them unsuitable for retirees needing regular income and flexibility.
A better approach would be a diversified, low-risk income strategy tailored to your father’s goals:
> Senior Citizen Savings Scheme (SCSS)
Invest up to Rs 30 lakh
Offers ~8.2% annual interest, paid quarterly (approx. Rs 61,500 per quarter)
5-year tenure, with early exit allowed post 1 year (small penalty)
Excellent for steady income
> Bank Fixed Deposits (FDs)
Allocate Rs 10–12 lakh in short-term (1-year) FDs for liquidity (like your wedding)
Senior citizen FDs offer ~7.5–8%
Laddering (1-3 years) improves flexibility
> Debt Mutual Funds
Consider short-duration or target maturity funds
Returns around 7–8%, though market-linked
No lock-in, flexible withdrawals
Taxed as per slab (post-April 2023)
> Equity SIP (Small Allocation)
Limit equity exposure to 5–10% (Rs 3–5 lakh)
Use Nifty 50 Index Funds for long-term growth
Not for income, but to beat inflation
> Avoid ULIPs, endowment plans, and PMS products
These products are either too complex, expensive, or illiquid for your father’s current needs.
Understanding ULIPs
Unit-linked insurance Plans (ULIPs) combine life insurance and investment into a single product. A portion of your premium is allocated to life insurance coverage, while the rest is invested in market instruments like equity or debt, managed by professional fund managers. ULIPs offer the flexibility to switch between equity and debt funds based on your risk appetite or market outlook, making them appealing for investors seeking both protection and returns.
Compared to mutual funds, ULIPs have a 5-year lock-in period, while mutual funds offer greater liquidity. One key tax advantage of ULIPs is that switching between funds is tax-free, unlike mutual fund switches, which may attract capital gains tax.
However, ULIPs often lack transparency in terms of fee structure and fund allocation. High initial charges and hidden commissions can erode returns, making them less efficient than mutual funds for pure investment purposes. Investors must weigh flexibility against cost and transparency.
Your current thinking is sound, focus on low-risk, income-generating tools like SCSS and FDs, while maintaining some liquidity for near-term needs. Keep equity exposure minimal and avoid locking funds in ULIPs. Consider consulting a fee-only financial advisor to personalise this further.
(Views expressed by the 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.)