Is Rs. 10,000 per month achievable through mutual fund investments?

Ans: Your goal to withdraw Rs. 10,000 monthly from investments is achievable with proper planning. This requires a combination of systematic investment and disciplined withdrawals. Below is a detailed assessment and plan.

Key Considerations
1. Expected Return on Investment

Mutual funds can deliver an annual return of 8%-12% over the long term.
For a regular monthly withdrawal, balanced or hybrid funds can provide stability.
2. Withdrawal Strategy

Systematic Withdrawal Plans (SWPs) are ideal for regular withdrawals.
They offer consistent cash flow without disrupting investments.
3. Investment Corpus Requirement

To withdraw Rs. 10,000 monthly, an estimated corpus of Rs. 15-20 lakh is needed.
The exact amount depends on fund performance and withdrawal duration.
Selecting the Right Mutual Funds
1. Balanced Advantage Funds

These funds invest in a mix of equity and debt.
They provide stable returns and minimise market volatility.
Ideal for generating regular income with moderate risk.
2. Hybrid Funds (Aggressive)

These funds invest predominantly in equity and some debt.
They offer growth potential with partial downside protection.
Suitable for long-term withdrawals with higher returns.
3. Equity Income Funds

These funds focus on dividend-paying stocks and equity instruments.
They generate regular income and capital appreciation over time.
Best for moderate risk-takers with a long horizon.
4. Debt-Oriented Funds

These funds invest primarily in fixed-income securities.
They ensure low risk but lower returns compared to equity-heavy funds.
Suitable if stability is a higher priority than growth.
Recommendations for SWP Strategy
1. Diversified Allocation

Allocate funds across equity, hybrid, and debt categories.
This reduces risk and ensures consistent withdrawals.
2. SIPs for Corpus Building

If corpus is not yet ready, invest through SIPs in hybrid funds.
SIPs average out cost and build the desired corpus systematically.
3. Monitor Fund Performance

Review fund performance every six months.
Exit funds consistently underperforming their benchmark.
4. Tax-Efficient Withdrawals

SWP redemptions from equity funds are taxed as per LTCG/STCG rules.
Plan withdrawals to minimise tax impact.
Steps to Implement the Plan
1. Assess Current Investments

Check existing investments for overlap and performance.
Consolidate into funds aligning with your withdrawal goals.
2. Start with Hybrid Funds

Begin investing in balanced or aggressive hybrid funds.
Ensure funds have a proven track record of delivering consistent returns.
3. Plan Withdrawal Amount and Frequency

Use an SWP to withdraw Rs. 10,000 monthly.
Start withdrawals only after the corpus reaches the required size.
4. Consider Inflation Adjustment

Plan for increasing monthly withdrawals in the future.
Ensure the corpus grows to sustain inflation-adjusted withdrawals.
Taxation Awareness
1. Equity Fund Withdrawals

LTCG above Rs. 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
2. Debt Fund Withdrawals

Gains are taxed as per your income slab.
Plan withdrawals to minimise overall tax liability.
Final Insights
A corpus of Rs. 15-20 lakh is necessary to withdraw Rs. 10,000 monthly.

Invest in a mix of balanced advantage, hybrid, and equity income funds.

Start with SIPs if you need to build the corpus gradually.

Opt for SWPs to ensure consistent and tax-efficient withdrawals.

Review fund performance regularly and adjust investments as needed.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment