How to plan 10 crore in investments for a person to retire early?

I would still plan to invest this sum in such a way, that not only me but my family and future generations can also benefit from this.

The secret to outliving any corpus (especially in early retirement) is:

• Generate as many sources of passive income as possible
• Try to keep capital as safe as possible. But do take some risks.
• Reinvest a portion of the passive income generated to further grow the capital.

The below is a good mix of different products with different risk appetites where I would probably think of investing the mentioned amount of 10 Cr.

Disclaimer: This plan is according to my risk appetite and preferences only and can vary from person to person.

Investment 1: (2 Cr) Moderate risk:

Investment of 2 Cr in SWP plan in index funds in a mixture of debt/equity mutual funds

. Please find below the features of the plan:

• 0.5–0.75% monthly payout on capital
• The investment will be done across debt and equity index mutual funds

In this case:

Total investment amount: 2 Cr

Estimated Monthly payout: 1–1.5L Lacs

Return on investment annually: 12–18 Lacs (pre tax)

This means you can generate a monthly income of average 1.25 Lacs pm

Investment 2: (1 cr) Safe/Defensive risk:

• Start 2 FDs of 50 Lacs each which will offer me capital protection as well as another source of stable income. At a 6% interest rate, I can generate a monthly interest of 50000–55000 pm

Investment 3: (2.5-3 Cr) Moderate risk:

• Buy 2 plot/commercial shops in my locality for 1.2–1.5 Cr each. Place them on rent. In a good locality, this investment would help me fetch a rent of 40000–45000, which would give me a combined monthly income of 90000–1 Lac per month for the two properties. I prefer commercial over residential properties.

Investment 4: (2 Cr) Safe/Defensive risk:

• Invest 2 Cr in RBI Bonds. At an 8.5% rate of interest and an interest payout schedule every 6 months, that would mean an 8.5 L payout every 6 months, or a monthly average interest income of 70000 pm

Investment 5: (1 Cr) Moderately Aggressive risk:

• Invest 1 Cr in dividend-paying stocks like Coal India, ONGC, Power Finance Corporation, ITC, IOCL, REC, etc. Even if I consider a 1% dividend yield across all stocks, that gives me an income of 1L pm. As these are mostly public sector stocks, so the risk will be a bit lower.

• Invest 50L in options selling with hedging plans/invoice discounting plans which generate a 1.5-2% profit monthly on your capital. Since this is just 5% of the overall capital, this is an aggressive but managed risk that I wouldn’t mind taking. My monthly income can range between 75000-90000 pm in these types of plans.

Now that I have six sources of income,

• I would keep 25–30 Lacs in my bank in case of any emergency, as liquidity is always very important. I can also get interest income from the bank which is another additional income.
• Buy a good health insurance plan. This should include critical illness riders, accident coverages, and all other essential features. It is essential to buy a good plan so that in case of any medical emergencies, one is always covered.
• I can also reinvest part of the income generated every month to further grow my capital.

Let’s analyze what position the above investments put me in:

• I now have six sources of passive income amounting to almost 5 Lacs pm.
• I have investments across a variety of products like equities, bonds, mutual funds, FDs, real estate, insurance, etc.
• My base capital is protected in almost all investments.
• I have two additional assets (plot/commercial shop)
• I have a healthy corpus in his bank for any liquidity/immediate cash requirement.
• I have a good health insurance plan to provide adequate cover for medical emergencies.

Well, I guess I am pretty much sorted. Now I can go and do whatever I want with a healthy financial cushion to provide me comfort.

Hope this helps!