Hi, I am 29 (married) and currently doing job earning approx. 2.5L/month which is very stressful, I was always dreamt of following my passion and earn income from doing something which I love. So I started accumulating money to quit this job and start something else. Currently I have 42lac liquid cash(not sure where to invest so kept it in bank account), 11lac gold, 2.5lac mf, 3lac PPF. Lives in own home in a tire 3 area. Responsibilities are 1. I have a join home loan with my father of 20lac and paying 15k/month EMI. 2. Need 10k/month for my lifestyle. My question is how can I earn a regular monthly return of 25k to 30k from the 43lac I accumulated and so that I can stop with the current job and start focusing on what I want to do with my life (I want to do content creation/freelancing/stock trading also if I can get more return don't want to risk the capital/switching to a less stressful job with less pay) I am not looking to retire, all need is my time to myself.

Ans: You're on the right track by saving up for your dreams. Let's create a plan to help you achieve your goals. Your desire to shift to something you love is inspiring. Balancing your investments and ensuring regular returns is crucial.

Understanding Your Current Financial Situation
Monthly Income: Rs. 2.5 lakhs

Home Loan EMI: Rs. 15,000 (jointly with your father)

Monthly Lifestyle Expenses: Rs. 10,000

Current Assets:

Liquid Cash: Rs. 42 lakhs
Gold: Rs. 11 lakhs
Mutual Funds: Rs. 2.5 lakhs
PPF: Rs. 3 lakhs
Goals and Requirements
You want a regular monthly return of Rs. 25,000 to Rs. 30,000. This income will allow you to focus on your passion without worrying about finances.

Analyzing and Evaluating Investment Options
Systematic Withdrawal Plan (SWP) in Mutual Funds
Why SWP?

SWP is a great way to generate regular income from mutual funds. You invest a lump sum in a mutual fund and withdraw a fixed amount regularly.

Advantages of SWP:

Provides a steady income.
Flexibility in choosing the withdrawal amount and frequency.
Potential for capital appreciation while receiving income.
Risks of SWP:

Market volatility can affect the fund's value.
Withdrawals may reduce the corpus over time if returns are lower.
Mutual Fund Categories
Debt Mutual Funds:

Lower risk, suitable for generating steady income.
Invests in bonds, government securities, and money market instruments.
Balanced or Hybrid Funds:

Combines equity and debt for balanced risk and return.
Suitable for moderate risk appetite.
Equity Mutual Funds:

Higher risk, potential for higher returns.
Invests in stocks of companies.
Power of Compounding:

Mutual funds, especially equity funds, benefit from compounding. Over time, returns can grow significantly.

Professional Management:

Mutual funds are managed by professionals, ensuring strategic investments and diversification.

Regular Review:

It's essential to review your mutual fund performance regularly. Adjustments may be needed based on market conditions and your goals.

Fixed Deposits (FDs)
Why FDs?

FDs provide guaranteed returns and are a safe investment option. However, they offer lower returns compared to mutual funds.

Advantages of FDs:

Guaranteed returns.
Safe and secure investment.
Liquidity options with premature withdrawal.
Risks of FDs:

Lower returns may not keep pace with inflation.
Less flexibility compared to mutual funds.
Public Provident Fund (PPF)
Why PPF?

PPF is a long-term, safe investment with tax benefits. It offers stable returns but with a lock-in period.

Advantages of PPF:

Safe investment with guaranteed returns.
Tax benefits under Section 80C.
Suitable for long-term goals.
Risks of PPF:

Lock-in period restricts liquidity.
Lower returns compared to market-linked investments.
Avoiding Stock Trading
Dangers of Stock Trading:

High Risk: Stock trading involves significant risk. Market volatility can lead to substantial losses.
Time-Consuming: Requires constant monitoring and quick decision-making.
Stressful: Can add to your stress instead of reducing it.
Creating a Diversified Investment Plan
Step 1: Emergency Fund

Maintain at least Rs. 2-3 lakhs in a savings account or FD for emergencies. This ensures liquidity and security.
Step 2: Invest in Mutual Funds with SWP

Allocate a portion of your liquid cash (Rs. 42 lakhs) into a mix of debt and balanced mutual funds. This provides stability and potential for growth.
Set up an SWP to withdraw Rs. 25,000 to Rs. 30,000 monthly. This gives you a steady income stream.
Step 3: Keep Gold as a Safety Net

Gold is a good hedge against inflation and financial uncertainty. Retain your Rs. 11 lakhs in gold.
Step 4: Continue with PPF Contributions

Continue contributing to your PPF for long-term stability and tax benefits. This adds to your retirement corpus.
Optimizing SWP for Regular Income
Step 1: Calculate Withdrawal Rate

Determine a sustainable withdrawal rate to ensure the corpus lasts. Typically, a 4-5% annual withdrawal rate is considered safe.
Step 2: Monitor Fund Performance

Regularly review the performance of your mutual funds. Adjust the SWP amount if needed based on returns and market conditions.
Step 3: Rebalance Portfolio

Periodically rebalance your portfolio to maintain the desired asset allocation. This ensures your investments stay aligned with your goals.
Health and Term Insurance
Health Insurance:

Get a comprehensive health insurance plan. It protects against high medical costs and ensures financial stability.
Term Insurance:

Purchase a term insurance policy with adequate cover. This protects your family’s financial future.
Switching to a Less Stressful Job
Evaluate Financial Impact:

Consider the impact of a lower salary on your financial goals. Ensure you have enough income to cover expenses and investments.
Maintain Regular Investments:

Continue with your investment plan even with a lower salary. Adjust the amounts if needed, but keep investing.
Final Insights
Achieving financial freedom to pursue your passion is possible with careful planning. Your current savings and investments are a good start. By diversifying your portfolio and setting up a Systematic Withdrawal Plan, you can generate the regular income you need. Avoid the pitfalls of stock trading and focus on safer, steady investment options. Regularly review your investments and adjust as needed. Remember, your well-being is paramount. Strive for a balance between financial security and pursuing your dreams.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in