Sir, i have 25 lakh in FD and another 18 lakh FD which has OD limit. In such case what would you suggest combining both and making a fresh FD @7.25% or Mutual fund equity based @ %?. bank FD will incurr some 27000.00 per month and equity based mutual fund will incur 33000.00 per month, which will reflect in my savings a/c. What would you suggest?

Ans: I can offer a breakdown of the two options and some factors to consider when making your decision:

Option 1: Combine FDs and Make a New FD @ 7.25%

Pros:

Safety: Fixed deposits are considered a low-risk investment with guaranteed returns.
Regular Income: You'll receive a fixed monthly interest payout.
Liquidity: You can typically break FDs before maturity (though with penalties).
Cons:

Potentially Lower Returns: Historically, equity mutual funds have offered higher potential returns than FDs over the long term. 7.25% might not outpace inflation over time.
Taxation: Interest income from FDs is taxed as per your income slab.
Option 2: Invest in Equity Mutual Funds (SWP)

Pros:

Potentially Higher Returns: Equity mutual funds have the potential for higher returns compared to FDs over the long term (10+ years).
Growth Potential: Your investment can grow over time, potentially outpacing inflation.
Cons:

Market Volatility: Equity investments carry market risk, and your returns can fluctuate.
No Guaranteed Returns: Unlike FDs, there's no guarantee of returns in equity markets.
SWP Set-up: Setting up an SWP (Systematic Withdrawal Plan) might require planning to ensure enough liquidity for your monthly needs.
Additional Factors to Consider:

Investment Horizon: A longer investment horizon (10+ years) generally favors equity mutual funds for potentially higher returns.
Risk Tolerance: Equity markets can be volatile. Consider your comfort level with potential fluctuations.
Financial Goals: Are you saving for retirement, a child's education, or a short-term goal? This can influence your risk tolerance and investment choices.
Emergency Fund: Ensure you have an adequate emergency fund outside of this investment to cover unexpected expenses.
Here are some suggestions:

Consult a Financial Advisor: A qualified advisor can assess your risk profile, financial goals, and recommend a suitable investment strategy combining FDs and equity mutual funds (through SWP) to meet your needs.
Consider a Hybrid Approach: You could invest a portion (say 60%) in equity funds for growth and the remaining (40%) in FDs for regular income and stability.
Start an SIP in Equity Funds: Instead of a lump sum investment, consider a Systematic Investment Plan (SIP) in equity funds to rupee-cost average and potentially reduce risk.
By carefully considering these factors and consulting a financial advisor, you can make an informed decision about how to allocate your 43 lakhs between FDs and equity mutual funds to achieve your financial goals.