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Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 24, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Darshan Question by Darshan on Dec 04, 2024Hindi
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Hello, I want a monthly withdrawal of 2lakh through SWP. Give me the amounts and expect ROI for various instruments that I should use. Also what factor to consider as I would be able to invest those amount lets say after a year.

Ans: To achieve a sustainable monthly withdrawal of Rs. 2 lakh (Rs. 24 lakh annually), we need to identify the right mix of investments and expected returns. Let us create a detailed framework.

1. Factors to Consider Before Investing
Time Horizon: You plan to start investing after a year. This delay impacts your compounding benefit, but planning ahead mitigates it.

Expected Rate of Return (ROI): Different instruments offer varied returns. Diversification ensures both growth and stability.

Withdrawal Feasibility: Sustainable withdrawals depend on balancing withdrawals with corpus growth.

Inflation Impact: Investments must generate returns above inflation to preserve corpus value.

Risk Appetite: Choose instruments aligning with your comfort towards volatility.

Tax Efficiency: Optimise your withdrawals and investments for better post-tax returns.

2. Expected ROI for Investment Options
Here is the expected ROI and rationale for different asset classes:

Actively Managed Equity Mutual Funds

Allocation: 50% of the corpus
Expected ROI: 12% annually
Rationale: These funds provide high returns and help beat inflation over the long term.
Debt Mutual Funds

Allocation: 30% of the corpus
Expected ROI: 7% annually
Rationale: These offer stability with moderate returns and are suitable for regular withdrawals.
Fixed-Income Instruments (e.g., FDs, SGBs)

Allocation: 15% of the corpus
Expected ROI: 6-7.5% annually
Rationale: Secure returns with no market risk. Ideal for stability.
Liquid Mutual Funds

Allocation: 5% of the corpus
Expected ROI: 4-5% annually
Rationale: Quick access for emergencies or interim cash flow needs.
3. Corpus Required for Rs. 2 Lakh Monthly Withdrawal
Corpus Based on ROI
At 8% ROI: A corpus of Rs. 3 crore is required.
At 9% ROI: A corpus of Rs. 2.66 crore is required.
At 10% ROI: A corpus of Rs. 2.4 crore is required.
The corpus requirement reduces with higher returns but increases risk exposure.

Building the Corpus Over One Year
If the funds are idle for a year, invest them in liquid mutual funds temporarily. These yield 4-5% with low risk.
Use Systematic Transfer Plans (STPs) to gradually move funds into equity and debt over 12-18 months.
4. Investment Plan for SWP
Equity Mutual Funds (50% Allocation)
Allocate Rs. 1.5 crore to equity funds.
Delay SWP for at least three years to allow growth.
Equity funds ensure high long-term returns, reducing inflation's impact.
Debt Mutual Funds (30% Allocation)
Allocate Rs. 90 lakh to debt funds.
Start SWP immediately from this portion.
These funds provide stable returns and low volatility.
Fixed-Income Instruments (15% Allocation)
Allocate Rs. 45 lakh to secure instruments like FDs or Sovereign Gold Bonds.
Use these funds for stability and emergencies.
Liquid Mutual Funds (5% Allocation)
Allocate Rs. 15 lakh to liquid funds.
Use these funds for interim liquidity needs and to manage cash flow gaps.
5. Steps for Efficient Withdrawal
Start withdrawals from debt and liquid funds first. Let equity funds grow for 3-5 years.
Monitor returns annually to adjust the withdrawal rate or asset allocation.
Keep a buffer of 1-2 years' expenses in liquid funds for emergencies.
Review the tax efficiency of your withdrawals and rebalance your portfolio every year.
Final Insights
A well-diversified portfolio ensures stable withdrawals of Rs. 2 lakh monthly. Focus on equity for growth, debt for stability, and liquid funds for emergencies. Starting the plan early and monitoring it regularly will ensure financial independence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

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Sir very good evening. Can you please suggest few names of funds for doing swp and sir minimum how much funds is required to deposit to avail every month one lakh pls explain briefly as i don't have knowledge about this, i shall be highly obliged to you. Regards
Ans: A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investments regularly. It provides a steady income stream while keeping your capital invested and potentially growing.

Benefits of SWP
Regular Income: SWP gives you a predictable monthly income, which is useful for meeting regular expenses.

Tax Efficiency: Only the gains portion of each withdrawal is taxed, making SWP more tax-efficient compared to other withdrawal methods.

Flexibility: You can choose the withdrawal frequency (monthly, quarterly, etc.) and adjust the amount as per your needs.

Estimating the Required Investment
To determine the amount needed to receive ?1 lakh per month through SWP, we need to consider the expected return on investment. For simplicity, let’s assume an average annual return of 8%.

Calculation Example
Annual Withdrawal: ?1 lakh per month equals ?12 lakh per year.

Expected Return: With an assumed return of 8%, we need to estimate the corpus.

Required Corpus: Using the formula for SWP, the required corpus can be approximated as ?1.5 crore. This ensures the withdrawals and returns balance over time.

Professional Advice
I recommend consulting a Certified Financial Planner (CFP) to get a precise calculation tailored to your financial situation.

Suggested Funds for SWP
When choosing funds for SWP, consider stability, performance, and track record. Here are some fund types to consider:

Balanced Funds
Balanced funds invest in both equities and debt instruments, providing a mix of growth and stability. They are suitable for generating regular income with moderate risk.

Debt Funds
Debt funds invest in fixed-income securities like bonds and government securities. They offer lower risk and steady returns, making them ideal for conservative investors seeking regular income.

Hybrid Funds
Hybrid funds combine equity and debt investments. They offer the potential for higher returns compared to pure debt funds while maintaining lower volatility than equity funds.

Implementing SWP
Steps to Set Up SWP
Choose the Right Funds: Select funds that match your risk tolerance and income needs.

Invest the Corpus: Invest the required amount (e.g., ?1.5 crore) in the selected funds.

Set Up SWP: Contact your mutual fund distributor (MFD) or the fund house to set up the SWP. Specify the withdrawal amount (?1 lakh) and frequency (monthly).

Monitoring and Adjusting
Regularly review your investments and SWP plan. Adjust the withdrawal amount or switch funds if needed to ensure sustainability and meet your income needs.

Advantages of Actively Managed Funds
Professional Management: Actively managed funds benefit from the expertise of fund managers who make strategic decisions to maximize returns.

Market Adaptability: These funds can adapt to changing market conditions, potentially leading to better performance compared to passive index funds.

Disadvantages of Direct Funds
Higher Effort: Direct funds require you to manage your investments, which can be time-consuming and complex.

Professional Guidance: Investing through an MFD with CFP credentials ensures you receive professional advice and management tailored to your goals.

Conclusion
Implementing an SWP can provide you with a steady income of ?1 lakh per month. Choose balanced, debt, or hybrid funds based on your risk tolerance. Consult a CFP to ensure your investment strategy aligns with your financial goals. Regular monitoring and adjustments will keep your plan on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jul 12, 2024Hindi
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Hi, Im 48 years old and need to know about SWP. What should be the ideal withdrawal percentage from SWP. For example if I put 20 lakhs in SWP is 20000 per month OK. Can I expect growth in principal amount also? Please suggest some good SWP?
Ans: What is SWP?
Regular Withdrawals: SWP allows you to withdraw a fixed amount regularly.
Investment in Mutual Funds: Your investment remains in mutual funds while you withdraw.
Ideal Withdrawal Percentage
Determining the Right Percentage
Sustainable Withdrawals: A withdrawal rate of 5-6% per year is generally considered sustainable.
Monthly Example: For Rs. 20 lakhs, a 6% annual withdrawal rate equals Rs. 10,000 per month.
Your Scenario
Current Plan: Rs. 20,000 per month from Rs. 20 lakhs is a 12% annual withdrawal.
High Withdrawal: This rate is high and may deplete your principal over time.
Expecting Growth in Principal Amount
Factors Affecting Growth
Market Performance: Growth depends on the performance of the mutual fund.
Withdrawal Rate: A lower withdrawal rate helps in maintaining and potentially growing the principal.
Suggested Withdrawal Strategy
Balanced Approach
Reduce Withdrawals: Consider reducing withdrawals to Rs. 10,000 per month.
Monitor Performance: Regularly check the performance and adjust if needed.
Benefits of Actively Managed Funds
Active Management
Professional Expertise: Actively managed funds can adjust strategies based on market conditions.
Potential for Higher Returns: These funds may offer better returns compared to passive index funds.
Finding the Right SWP
Diversified Funds
Equity Funds: For potential growth, allocate a portion to equity funds.
Debt Funds: For stability, include debt funds in your SWP.
Hybrid Funds: Combine the benefits of equity and debt for balanced growth.
Regular Review and Adjustment
Stay Updated
Quarterly Reviews: Check the performance of your SWP every quarter.
Rebalance: Adjust the allocation between equity and debt funds based on performance.
Additional Considerations
Professional Guidance
Consult a CFP: A Certified Financial Planner can provide tailored advice for your needs.
Final Insights
Sustainable Withdrawals: Keep your withdrawal rate around 5-6% annually.
Diversify Investments: Balance your SWP between equity, debt, and hybrid funds.
Regular Monitoring: Regularly review and adjust your SWP to ensure long-term sustainability.
By following this strategy, you can aim to maintain a steady income while preserving your principal amount.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 04, 2024

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Sir,I am Sreejith..I am looking to do an SWP for my father, who is 70 years old now, targeting a monthly withdrawal of Rs.10,000/-. The lumpsum amount intending to invest is Rs.8-9 lakhs. Is this possible with this amount to withdraw an amount of of Rs.10,000/-.per month? Which type of mutual funds are good for doing SWP ? Is it wise to do SWP in equity oriented funds like large cap, Mid cap,Flexi cap etc. Also is it good to do SWP in two mutual funds with the above Rs.8-9 lakhs. ?Sir, Iam expecting your valuable reply.
Ans: Systematic Withdrawal Plan (SWP) is an excellent way to ensure regular income during retirement. Given that your father is 70 years old, it's important to balance growth and safety. Let’s assess your situation to provide a 360-degree solution.

Assessing the Lumpsum Amount
Investment Corpus: You intend to invest Rs. 8-9 lakhs. This amount is crucial in determining the monthly withdrawal amount of Rs. 10,000.

Sustainability of SWP: With Rs. 8-9 lakhs, withdrawing Rs. 10,000 monthly could be challenging over a long period. Let's explore how this can be managed.

Understanding SWP in Different Mutual Funds
Equity-Oriented Funds: These funds, such as large-cap, mid-cap, and flexi-cap, generally provide higher returns. However, they are also volatile. While equity can provide inflation-beating returns, it might not be the best sole option for a 70-year-old.

Hybrid Funds: A balanced or hybrid fund combines equity and debt. This mix can provide growth with lower volatility. It’s safer for an SWP at your father’s age.

Debt Funds: These funds are safer and less volatile. They might not offer high returns but can provide stable income. They are often used for SWP by retirees to preserve capital.

Which Type of Mutual Funds Are Good for SWP?
Balanced Approach: Combining equity and debt funds can create a balanced portfolio. This approach offers both growth and safety.

Two-Fund Strategy: Splitting the Rs. 8-9 lakhs into two different funds can diversify risk. One fund could be a hybrid fund, and the other a debt fund. This combination can provide stability and growth.

Safety First: Considering your father's age, prioritise safety. The bulk of the investment should be in debt or hybrid funds. A smaller portion can be in equity to capture growth potential.

Is SWP in Equity-Oriented Funds Wise?
Risk Consideration: Pure equity funds can be risky for someone in retirement. Market fluctuations can affect the fund value, impacting the sustainability of the SWP.

Diversification: If opting for equity-oriented funds, ensure they are part of a diversified portfolio. Avoid putting the entire amount in high-risk funds.

Long-Term Growth: While equity can provide good returns, it’s crucial to balance it with safer options, especially when relying on the funds for regular income.

Practical Insights on SWP Execution
Withdrawal Sustainability: If you withdraw Rs. 10,000 monthly from Rs. 8-9 lakhs, the sustainability depends on the fund’s performance. In a conservative estimate, this might last for 8-10 years in a balanced portfolio.

Reinvestment of Gains: If the funds perform well, you can reinvest the gains to extend the SWP period. This requires regular monitoring.

Consulting a CFP: To ensure the strategy aligns with your father’s needs, consult a Certified Financial Planner. They can tailor the fund selection to match his risk profile and income requirements.

Final Insights
Balanced Portfolio: Prioritise a mix of equity and debt, leaning more towards safety due to your father's age.

Two-Fund Strategy: Split the investment into two different funds to diversify risk and ensure stable withdrawals.

Monitoring: Regularly review the performance of the funds. Adjust the SWP if required to maintain sustainability.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Janak

Janak Patel  |21 Answers  |Ask -

MF, PF Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 10, 2025Hindi
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Hi, I am 46 years old residing in a B Town in India. I have 2 daughters one 16 years old and second 7 years old. I have Savings of 25 Lakh in my account as emergency find. I have FD of 65 Lakhs. PF, PPF and NPS of 25 Lakhs, Mutual Fund and Shares of 25 Lakhs, Lic policies worth 25 Lakhs, Gold around 1.2 Crores. I have a medical insurance of 20 Lakhs for me and my family, Term insurance of 1Cr. As properties. I own 2 independent houses, 2 flats and 2 plots in Bangalore which has a current value of about 4.5 Cr. In my home town i have 2 Houses, 1 apartment and plots which has a current value of 2.75 Cr. Currently i am drawing a monthly salary of 2 Lakh rupees and get a rent of 30K/ month. I donot have any emi's and my monthly expenses is currently 75K. I am planning to retire at the age of 50. Is my financial condition stable to retire at the age of 50? Thanks for your suggestion in advance.
Ans: Hi,

Lets understand the value of your current Investments at the time of retirement. Below is the list with its current value and (expected rate of return).
Emergency Fund - 25 lakhs (3.5%)
Fixed Deposits - 65 lakhs (7%)
PF/PPF/NPS - 25 lakhs (8%)
MF/Stocks - 25 lakhs (10%)
LIC Policies - 25 lakhs (no change)
Your current investments listed above will achieve a value of 3.5 crore at the time of retirement 4 years from now.

Apart from this you have mentioned properties worth 7.25 Cr. Assuming you will only use/liquidate them if required, so excluding them from consideration for now.

You total income is 2.30 lakhs per month (includes rent) and expenses are 75k per month. So there is potential to add to the above investments for the next 4 years.

I will assume your current expenses are sufficient for the lifestyle you want to continue post retirement.
You will require a corpus on retirement after 4 years to sustain your expenses adjusted with inflation of 6% which will be close to 1 lakh per month (at the time of retirement).
With this starting point, and adjusting for inflation of 6% each year, and life expectancy of 30 years post retirement you need a corpus of approx. 2.5 crore - again assumed this will earn a return of 8% for the 30 years.
If you can invest wisely and generate a slightly higher return of say 10%, the corpus requirement will be 2 crore.

Your current investments at the time of retirement with value of 3.5 crore is sufficient to cover your expenses for the next 30 years inflation adjusted at 6%.
And this is excluding the properties you own and additional investments you can make for the next 4 years.

Summary - You are more than stable as far as your financial state is concerned. You have a strong base to meet your retirement needs and also a potential to create wealth for the generations ahead.

I want to highlight/recommend few points -
1. Increase the medical Insurance for yourself and family to 1Crore as medical expenses will only increase in future.
2. Stop the Term Life Insurance and save the premium for investment. As you have no liabilities and net-worth is high enough to cover any outcomes in life ahead, this premium is a lost cause considering your strong financial state.
3. Revisit the LIC Policies you have and consider surrendering/stopping them if they are not nearing their maturity. They are not giving you enough cover and providing below par returns. So do discuss with a trusted licensed advisor and evaluate them. If they will mature in the next 4 years, ignore this point.
4. Post retirement period is a long duration of 30 years, so do consider getting a good advisor - a Certified Financial Planner who can guide you to plan your retirement well and help you design a portfolio for additional wealth creation as a legacy for your children/dependents.


Thanks & Regards
Janak Patel
Certified Financial Planner.

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 11, 2025Hindi
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Hi, I have the following funds part of my SIP and the last 4 funds are my one time lump sum of 35K each and invested sometime in November last year. Are these good to hold (lump sum) and rest as SIP for another 5 years. 1 Kotak Flexicap Fund - Reg Gr 2 Kotak Flexicap Fund - Dir Gr 3 Tata Multi Asset Opp Dir Gr 4 TATA Nifty 50 Index Dir Pl 5 Technology Plan - Direct - Growth 6 Bandhan Sterling Value Fund-(Reg PIn) -Gr 7 Nifty Smallcap250 Quality 50 Index Fund - Dir - G 8 | HDFC Dividend Yield Direct Growth 9 Quant Large and Mid Cap Fund Direct Growth 10 Quant Multi Asset Fund Direct Growth 11 Groww Nifty Non Cyclical Consumer Index Fund Direct Growth 12 Motilal Oswal Midcap Fund Direct Growth Thanks in advance for your guidance.
Ans: You have invested in multiple funds through SIP and lump sum. Holding them for the next 5 years is a good approach. However, it is important to check if your portfolio is diversified, aligned with your goals, and tax-efficient.

Overlap Between Funds
Your portfolio has multiple funds from the same category.

Too many similar funds do not improve returns but make tracking difficult.

Checking fund overlap can help avoid duplication.

Actively Managed vs Index Funds
You have index funds in your portfolio.

Index funds do not offer downside protection in market corrections.

Actively managed funds can outperform the index in volatile markets.

Switching from index funds to actively managed funds can improve growth.

Direct vs Regular Funds
You have invested in direct funds.

Direct funds may seem cheaper, but they lack expert guidance.

Investing through an MFD with CFP credentials ensures better selection and tracking.

Regular funds provide better decision-making support over time.

Sector-Specific and Thematic Funds
You hold a technology fund.

Sector funds are high-risk, as they depend on one industry’s performance.

If the sector underperforms, returns may be negative for years.

A diversified approach reduces risk compared to sector-based investing.

Smallcap and Midcap Allocation
You have smallcap and midcap funds.

These funds can be highly volatile in the short term.

Holding them for 5+ years is necessary to reduce risk.

Ensure you rebalance if the portfolio gets too aggressive.

Multi-Asset and Dividend Yield Funds
Multi-asset funds provide stability during market corrections.

Dividend yield funds are suitable for conservative investors.

These funds help in balancing the portfolio between risk and return.

Final Insights
Reduce overlapping funds and focus on fewer, well-performing funds.

Exit index funds and shift to actively managed funds for better growth.

Consider switching from direct funds to regular funds for expert tracking.

Keep sector funds below 10% of your portfolio to avoid concentration risk.

Continue SIPs in high-quality diversified funds for long-term wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

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Can I run my family with 15 k exp and 20k retirement income
Ans: You have a monthly retirement income of Rs 20,000 and expect monthly expenses of Rs 15,000. On paper, this looks manageable, but there are important financial factors to consider. Let us analyse whether this income will be sufficient for the long term.

Cost of Living and Inflation Impact
Expenses will increase over time due to inflation.

If inflation is 6% per year, your Rs 15,000 monthly expenses may double in 12 years.

If income remains Rs 20,000, the gap between income and expenses will widen.

Healthcare and Medical Costs
Medical expenses increase with age.

Even with health insurance, out-of-pocket medical costs can rise.

If a medical emergency arises, your savings could be depleted quickly.

Emergency Fund Requirement
A sudden family emergency can strain finances.

Having at least 2–3 years' worth of expenses in a liquid fund is necessary.

If you do not have an emergency fund, your retirement income may not be sufficient.

Unplanned Expenses and Lifestyle Changes
New financial needs may arise, such as helping family members or home repairs.

You may want to travel, pursue hobbies, or engage in social activities.

A fixed retirement income can make such expenses challenging.

Investment Strategy for Long-Term Security
To beat inflation, invest a portion of savings in growth-oriented assets.

A mix of equity and debt funds will help generate better returns.

A Systematic Withdrawal Plan (SWP) from equity funds can provide a higher monthly income.

Alternative Income Sources
Consider part-time work, freelancing, or consulting if possible.

Rental income or dividends from investments can support retirement cash flow.

Final Insights
Rs 20,000 may be enough now, but inflation and rising costs can make it insufficient later.

A combination of investments, emergency funds, and alternate income sources will provide financial security.

Regularly review and adjust your financial plan to sustain your retirement lifestyle.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 11, 2025Hindi
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Hello sir, I have about 28 lakhs invested in different MF. Now i want a SWP of 35000 per month from that total fund. Looking at the current market situation I was either thinking if dividing the fund between debt 30% and equity 70%. But instead of investing a lumpsum amounts will it make more sense to park all my funds in a dynamic debt fund and then every month do SIP of maybe one lakh each to equity fund or balanced fund. Also i would like to know what difference will it make in my investment returns between sip and lumpsum except ofcourse averageing the market volatility in case of SIP and getting more UNITS if done lumpsum.
Ans: You have Rs 28 lakh invested in mutual funds and want to withdraw Rs 35,000 per month through a Systematic Withdrawal Plan (SWP). You are considering whether to invest the corpus as a lump sum in a 70% equity – 30% debt allocation or to park the full amount in a debt fund and do an SIP of Rs 1 lakh per month into equity.

Your goal should be to generate stable withdrawals while preserving your capital and ensuring growth. Below is a structured approach to managing your funds wisely.

Understanding SWP and Its Impact on Your Corpus
SWP is a cash flow strategy, allowing regular withdrawals while the remaining corpus continues to grow.

The key challenge is to balance withdrawals and growth so that the corpus does not deplete too soon.

Investing in a mix of debt and equity will ensure stability while benefiting from market growth.

Option 1: Investing 70% in Equity and 30% in Debt
This allocation is suitable for long-term growth. Equity provides growth, while debt ensures stability.

A balanced portfolio helps manage volatility and ensures a steady SWP.

The downside is that a lump sum investment in equity exposes you to market fluctuations.

If the market falls after investing, the SWP may lead to selling equity at a lower value, reducing corpus longevity.

Option 2: Parking in a Debt Fund and Doing Monthly SIPs
This reduces market timing risk by investing gradually.

Debt funds provide low but steady returns, protecting the corpus while equity exposure increases.

SIPs spread the risk over time, ensuring better price averaging.

The downside is that debt funds provide lower returns, which may impact the final corpus.

SIP vs Lump Sum: Key Differences
SIP helps in market averaging, reducing the impact of volatility.

Lump sum investment can generate higher returns if the market performs well.

SIP is better for those worried about market crashes, while lump sum works well for long-term investors willing to take higher risks.

Best Strategy for You
A hybrid approach will work best:

Step 1: Park Rs 28 lakh in a low-duration or dynamic debt fund.

Step 2: Start an SIP of Rs 1 lakh per month into equity for 24–28 months.

Step 3: Withdraw Rs 35,000 per month from the debt fund until equity allocation builds up.

Step 4: After 2–3 years, rebalance to maintain a 60% equity – 40% debt allocation for stability.

Tax Implications of SWP
Withdrawals from equity funds held for over 1 year attract 12.5% tax on LTCG above Rs 1.25 lakh.

Withdrawals before 1 year attract 20% STCG tax.

Withdrawals from debt funds are taxed as per your income tax slab.

Final Insights
A mix of debt and equity will ensure growth and stability in your SWP plan.

Parking the corpus in a debt fund first and then gradually shifting to equity is a safer approach.

Rebalancing every 2–3 years will help manage risk and sustain withdrawals.

Keep track of taxation to optimise post-tax returns.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 12, 2025Hindi
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Hello Sir, I am 46. Unemployed due to health reasons. I have 28 lakhs i want to invest in SWP . I need 35000 monthly. How long do I have before my fund runs out? How should I invest to make the most of it? I want my funds to appreciate as well to be atleast propionate to my need of 35000. Given- if i invest in lumpsum than I get higher number of units and if i take the SIP route it can negate the market volatility. Looking at the current market scanerio i believe it may take couple of years to see proper returns. I was also thinking of pooling the entire corpus in Aggressive debt funds and then do a SIP to an actively managed equity fund. Under these circumstances please provide fund names also. Thanks in advance.
Ans: You are 46 and unemployed due to health reasons. You need Rs 35,000 per month from your investments. Your goal is to make your funds last longer while allowing growth.

Let us analyse your options and create a plan.

Assessing Your Requirement
You need Rs 4.2 lakh per year (Rs 35,000 x 12 months).

Your corpus is Rs 28 lakh.

If you withdraw Rs 4.2 lakh annually without growth, your funds will last less than 7 years.

You need growth to sustain withdrawals for a longer period.

Challenges with a High SWP Rate
A SWP of 15% per year (Rs 4.2 lakh from Rs 28 lakh) is too high.

Safe withdrawal rates are usually 4-6% per year.

A high withdrawal rate will deplete your corpus fast.

Investment Strategy for SWP
You need a mix of equity and debt to balance growth and stability.

Step 1: Allocate Corpus Wisely
Equity (50%): Invest for growth.
Debt (50%): Keep funds for the next 5-6 years of withdrawals.
This approach helps maintain stability while allowing long-term appreciation.

Step 2: SWP from Debt Funds
Start your SWP from debt funds to avoid withdrawing from volatile equity investments.

Debt funds provide stability and minimise short-term risk.

This ensures your equity investments have time to grow.

Step 3: Systematic Transfer to Equity
Keep your equity allocation in a flexi-cap or multi-cap fund for diversification.

Invest in a systematic transfer plan (STP) from a debt fund to an equity fund.

This reduces market timing risk and balances volatility.

Expected Corpus Longevity
If your portfolio grows at 8-10% annually, your funds may last 10-12 years.

If the market performs well, your funds may last longer.

A lower withdrawal rate will further extend sustainability.

Alternative Options to Sustain Your Corpus
Reduce withdrawals: If possible, lower monthly expenses to Rs 25,000-30,000.

Part-time income: If health permits, explore work-from-home or passive income options.

Medical emergency fund: Keep at least Rs 2 lakh aside for medical needs.

Review investments: Rebalance every year to maintain growth and stability.

Final Insights
Your current withdrawal rate is high.

A balanced equity-debt approach can extend the longevity of your corpus.

Use SWP from debt funds and STP to equity for better returns.

Monitor the portfolio regularly to ensure sustainability.

If possible, reduce withdrawals slightly to make the corpus last longer.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

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