My age is 57 yrs with no salary income. I had been working till last year & dependent family is mother & wife. Considering present & future economy of India, Please suggest the amount for lumpsum MF for SWP of 25000 Rs. and which MFs to be selected?

Ans: I’m assuming that you have invested in equity-oriented funds since your 40s or 50s and the funds are now stabilized and generating consistent return in the range of 11-13% on annual basis. On the basis of above assumption, I assume your portfolio to last till your early 70s.

Regarding the goal of daughter’s marriage, I suggest you to utilize your SCSS at the time of the goal as interest rate might be lower by time and you will get very low returns for re-investing in SCSS in that time.

As per my analysis, withdrawing 40k monthly will easily cater to your requirement till the age of 75 years.

Ans: Given your risk appetite and requirement for SWP after one year, it's crucial to focus on mutual fund schemes that offer potential for high returns while considering the relatively short investment horizon. Here are some suggestions:

Large & Midcap Funds: These funds invest in a mix of large-cap and mid-cap stocks, offering a balance between growth potential and stability. Look for schemes with a track record of consistent performance and experienced fund management.
Sectoral/Thematic Funds: If you have specific sectoral preferences and are willing to take higher risks, you can consider investing in sectoral or thematic funds. These funds focus on specific sectors or themes like technology, healthcare, or infrastructure, offering the potential for higher returns but also higher volatility.
Aggressive Hybrid Funds: Aggressive hybrid funds invest primarily in equities with a smaller allocation to debt instruments. They are suitable for investors seeking growth with relatively lower volatility compared to pure equity funds.
Flexi Cap Funds: These funds have the flexibility to invest across market capitalizations based on market conditions. They offer a dynamic approach to asset allocation and can adapt to changing market trends.
Mid & Small Cap Funds: If you have a higher risk tolerance and a longer investment horizon, mid and small-cap funds can potentially offer higher returns. However, they also come with higher volatility and risk, so careful selection and monitoring are essential.
When selecting mutual fund schemes, focus on factors such as fund performance track record, fund manager's experience and strategy, expense ratio, and risk-adjusted returns. Additionally, consider diversifying your investments across multiple schemes to spread risk.

It's advisable to consult with a certified financial planner or investment advisor who can assess your financial situation, risk tolerance, and investment goals to provide personalized recommendations aligned with your needs and preferences.

Ans: Ashok, it's admirable that you're proactively planning for your financial security at 62. Given your goal of generating Rs. 10,000 per month through a systematic withdrawal plan (SWP) from mutual funds, selecting the right fund is crucial.

Several mutual funds offer SWP options, allowing you to withdraw a fixed amount at regular intervals. Look for funds with a track record of consistent returns, low volatility, and suitable for your risk tolerance.

Consider funds that focus on generating regular income, such as debt funds or hybrid funds with a significant allocation to debt instruments. Some popular choices include liquid funds, short-term debt funds, and monthly income plans (MIPs).

Ensure you assess factors like fund performance, expense ratio, and the fund manager's track record before making a decision. Additionally, consider consulting with a Certified Financial Planner to tailor an investment strategy that aligns with your financial goals and risk profile.

By selecting the right mutual fund with a suitable SWP option, you can work towards generating a steady income stream to support your expenses in retirement. Remember to regularly review your investments and adjust your strategy as needed to ensure financial stability and peace of mind.

Ans: You want Rs. 1 lakh monthly from your mutual fund corpus. You also plan to invest Rs. 30 lakh more. Your goal is to withdraw through SWP while preserving your capital.

Let’s break this down step by step.

Existing Portfolio and New Investment
Your current mutual fund corpus is Rs. 70 lakh.
You plan to invest Rs. 30 lakh more.
Your total mutual fund investment will be Rs. 1 crore.
You have funds across balanced, multi-cap, mid-cap, and small-cap categories.
These are from three fund houses: HDFC, ICICI, and Nippon.
Required Withdrawal Through SWP
You need Rs. 1 lakh per month.
That equals Rs. 12 lakh per year.
Your goal is to withdraw this amount while keeping your corpus intact.
Sustainable SWP Strategy
To ensure that your money lasts, consider these points:

Average Expected Return: A mix of equity and debt funds can give 10-12% annual return.
Safe Withdrawal Rate: A sustainable SWP rate is 7-8% of the corpus.
Rs. 1 Crore Corpus: A 7-8% annual withdrawal is Rs. 7-8 lakh per year.
Shortfall: You need Rs. 12 lakh yearly but should ideally withdraw Rs. 7-8 lakh.
Solution for the Shortfall
To cover the extra Rs. 4-5 lakh needed:

Invest Rs. 30 Lakh More in Balanced and Debt Funds

This will create additional stability.
The portfolio will generate steady returns.
Withdraw Less in Initial Years

Start with Rs. 80,000 per month.
Increase withdrawal every year based on fund growth.
Rebalance the Portfolio Annually

Move profits from equity to debt funds.
Maintain an ideal mix of 60% equity and 40% debt.
Asset Allocation for Stability
To ensure long-term sustainability:

Equity Funds (60%) – For long-term capital growth.
Debt and Hybrid Funds (40%) – To provide stability and steady SWP.
Emergency Fund (Rs. 5-10 Lakh in FD or Liquid Funds) – To manage unexpected expenses.
Tax Implications of SWP
Equity Funds: If held for over 1 year, gains above Rs. 1 lakh are taxed at 10%.
Debt Funds: If held for over 3 years, gains are taxed at 20% with indexation benefits.
SWP Tax Impact: Only the capital gains portion of the withdrawal is taxed, not the principal.
Risk Management
Avoid Withdrawing Too Much: If you withdraw more than 8% yearly, the corpus may deplete.
Market Volatility: In bad market years, withdraw from debt funds instead of equity.
Keep Medical Insurance Active: Ensure coverage for hospital expenses to avoid using savings.
Final Insights
Your current corpus and planned investment are strong.
A well-structured SWP can provide Rs. 1 lakh monthly.
You must limit withdrawals to 7-8% to sustain funds for life.
Rebalancing and asset allocation are key for long-term stability.
Plan tax-efficient withdrawals to maximise savings.
Your financial independence is within reach. A disciplined strategy will keep your funds growing while providing steady income.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment