Investing Expert: Will my 1.1 Crore corpus last 15 years with 90k monthly withdrawal and 10% annual growth?

Ans: Your question is important. You want to withdraw Rs 90,000 per month from Rs 1.1 crore. You also want a 10% growth rate and a 4% increase in withdrawal each year. Let’s analyse how long your corpus will last and what happens after 15 years.

Your plan is well thought out. You have set a growth expectation and a rising withdrawal plan. However, it is important to evaluate the impact on your corpus over time.

Let’s break this into key areas.

Current Financial Setup
You have Rs 1.1 crore in your corpus.

You plan to withdraw Rs 90,000 per month.

You expect your corpus to grow at 10% per year.

You want to increase withdrawals by 4% every year.

This strategy must balance returns and withdrawals. The goal is to ensure long-term stability.

Understanding the Impact of Withdrawals
Your initial withdrawal of Rs 90,000 per month totals Rs 10.8 lakh per year.

This increases by 4% yearly, making it Rs 11.23 lakh in the second year.

By the 15th year, your annual withdrawal will be much higher.

Your corpus must grow faster than your withdrawals. Otherwise, your money will deplete over time.

Will Your Corpus Last?
If your corpus grows at 10% per year, it generates income.

Your withdrawals also grow, reducing the invested amount.

By year 15, your total withdrawals will be much higher than in the initial years.

If your investment delivers consistent 10% returns, your corpus will likely last beyond 15 years. However, if market fluctuations reduce returns, you may face shortfalls.

Key Risks to Consider
Market Fluctuations: A 10% return is not guaranteed every year. Some years may see lower returns.

Inflation Impact: Inflation can reduce your purchasing power. The real growth of your corpus matters more than nominal returns.

Taxation: Withdrawals may attract tax depending on your investment type. Plan accordingly.

How to Strengthen Your Plan
To improve the longevity of your corpus, follow these steps:

1. Diversify Investments
Invest in a mix of high-growth and stable options.

Equity funds can provide growth, while debt funds ensure stability.

A mix of 60% equity and 40% debt may balance risk and returns.

2. Adjust Withdrawals in Market Downturns
In years when markets perform poorly, consider reducing your withdrawals slightly.

This ensures your corpus lasts longer.

3. Keep a Cash Reserve
Maintain at least 1-2 years of withdrawals in a liquid fund.

This avoids selling investments in a bad market phase.

4. Review Your Plan Annually
Reassess your corpus growth and withdrawals every year.

Make small adjustments based on actual returns.

A CFP can guide you in optimising your withdrawal strategy.

Alternative Strategies for Better Results
If you want your corpus to last longer, consider these:

1. Reduce Initial Withdrawal Rate
Instead of starting with Rs 90,000 per month, begin with Rs 75,000.

This minor change can significantly increase the corpus life.

2. Invest in Actively Managed Mutual Funds
Actively managed mutual funds can provide better returns than index funds.

These funds aim to outperform market returns through expert management.

They also help in handling market volatility better.

3. Invest Through a Certified Financial Planner
Investing through a CFP ensures professional fund management.

Direct mutual funds lack advisory support, which can impact decision-making.

A CFP helps in fund selection, rebalancing, and withdrawal planning.

Final Insights
Your corpus of Rs 1.1 crore is strong, but withdrawals must be planned carefully.

A 10% return expectation is reasonable but not guaranteed every year.

Increasing withdrawals by 4% annually will put pressure on the corpus in later years.

Diversifying investments and maintaining liquidity can improve sustainability.

Regularly reviewing your plan ensures long-term financial security.

Working with a CFP can optimise returns and protect your wealth.

Your strategy is good, but small adjustments can make it even better. The goal is to ensure financial stability for 15+ years.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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