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Anil

Anil Rego  |388 Answers  |Ask -

Financial Planner - Answered on Mar 31, 2024

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Asked by Anonymous - Feb 22, 2024Hindi
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Hello Sir. Pls suggest a few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years. Goal is wealth creation and risk apatite is medium. Thanks

Ans: You can have your SIPs into various categories- Large, Multi, Mid and Small Cap funds. You can have a higher allocation to Large-cap & mid-cap funds since you have a moderate risk profile. Some Large-cap funds to mention are ICICI Bluechip Fund & Mirae Asset Largecap Fund. In the Multicap/Flexicap category we can look at Parag Parikh Flexicap Fund/Nippon India Multicap. In the mid-cap category one may look at HDFC Mid-cap and SBI mid-cap Funds. In the Small Cap category, you can use Nippon India Small Cap Fund.
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 26, 2024

Asked by Anonymous - Feb 22, 2024Hindi
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Hi Sir. Pls suggest a few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years. Goal is wealth creation and risk apatite is medium. Thanks.
Ans: I's great to see your commitment to long-term wealth creation. A 20-25 year investment horizon is ideal for significant growth. Your medium risk appetite allows for a balanced portfolio, mixing stability with growth potential.

Understanding Your Investment Horizon
Long-Term Benefits:

Compounding: Longer investment periods allow your investments to compound significantly.
Market Fluctuations: A long-term horizon helps to ride out market volatility, achieving better returns over time.
Recommended Mutual Fund Sectors
1. Large-Cap Funds:

Stability and Growth: These funds invest in large, well-established companies.
Less Volatility: They offer relatively stable returns compared to mid-cap and small-cap funds.
Steady Growth: Ideal for maintaining a solid foundation in your portfolio.
2. Mid-Cap Funds:

Growth Potential: These funds invest in medium-sized companies with higher growth potential.
Balanced Risk: They offer a balance between the stability of large-cap funds and the growth potential of small-cap funds.
3. Small-Cap Funds:

High Growth: These funds invest in small companies with the potential for significant growth.
Higher Risk: They are more volatile but can offer substantial returns over the long term.
4. Multi-Cap Funds:

Diversification: These funds invest across large-cap, mid-cap, and small-cap stocks.
Flexibility: Fund managers can adjust the portfolio mix based on market conditions.
5. Sectoral/Thematic Funds:

Focused Investment: These funds focus on specific sectors like technology, healthcare, or finance.
Higher Risk and Reward: Suitable for those willing to take on more risk for potential high returns in specific sectors.
6. Balanced/Hybrid Funds:

Risk Mitigation: These funds invest in a mix of equities and debt.
Stability and Growth: They offer a balance of growth potential and income stability.
SIP Allocation Strategy
Diversified Portfolio:

Large-Cap Funds: Allocate 30% of your SIP here for stability and consistent growth.
Mid-Cap Funds: Allocate 25% for higher growth potential with moderate risk.
Small-Cap Funds: Allocate 15% for high growth opportunities.
Multi-Cap Funds: Allocate 20% for diversification and flexibility.
Sectoral/Thematic Funds: Allocate 5% for focused high-risk, high-reward investments.
Balanced/Hybrid Funds: Allocate 5% for a mix of growth and stability.
Benefits of Regular Funds Over Direct Funds
Professional Management:

Expertise: Regular funds are managed by professionals who actively monitor and adjust the portfolio.
Personalized Strategy: Fund managers make informed decisions based on market trends and economic indicators.
Convenience and Support:

Guidance: Regular funds offer guidance and support from fund managers and advisors.
Ease of Access: These funds provide easy access to information and resources for investors.
Disadvantages of Direct Equity Investing
Higher Risk:

Volatility: Direct equity investments can be highly volatile, especially for individual investors.
Lack of Diversification: Investing in individual stocks can lead to lack of diversification, increasing risk.
Time and Knowledge:

Research Required: Direct equity investing requires extensive research and continuous monitoring.
Expertise Needed: It demands a higher level of expertise to make informed investment decisions.
Recommendations for Financial Security
Start Systematic Investment Plans (SIP):

Discipline: SIPs ensure disciplined and regular investing.
Rupee Cost Averaging: This approach helps mitigate market volatility over time.
Continue Provident Fund Contributions:

Retirement Corpus: Ensure continuous contributions to your provident fund for a substantial retirement corpus.
Set Up an Emergency Fund:

Safety Net: Set aside 6-12 months’ worth of expenses in a liquid fund for emergencies.
Conclusion
Investing Rs. 10 lakhs in SIPs across diversified mutual fund sectors can lead to substantial wealth creation over 20-25 years. Opt for a mix of large-cap, mid-cap, small-cap, multi-cap, sectoral, and balanced funds to balance risk and return. Regular funds, managed by professionals, offer better guidance and stability compared to direct equity investing. Ensure disciplined investing through SIPs, maintain your provident fund contributions, and set up an emergency fund for financial security.

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 Aug 21, 2024

Asked by Anonymous - Feb 22, 2024Hindi
Money
Hello Vivek ji. Pls suggest a few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years. Goal is wealth creation and risk apatite is medium. Thanks
Ans: You plan to invest Rs 10 lakhs in SIPs with a holding period of 20-25 years. Given this long-term horizon, you can benefit significantly from the power of compounding. However, selecting the right type of mutual funds is crucial to align with your financial goals and risk tolerance.

Why Sector Funds May Not Be Ideal
Sector funds focus on a specific industry, such as technology, healthcare, or banking. These funds can offer high returns, but they come with higher risk. The performance of sector funds is closely tied to the fortunes of that particular industry. If the sector underperforms, your entire investment could suffer.

Concentration Risk: Sector funds are exposed to concentration risk. If the chosen sector underperforms, your returns may be severely impacted.

Lack of Diversification: Sector funds lack diversification, as they focus on a single industry. Diversification is essential for managing risk, especially over a long-term horizon.

Given these factors, sector funds may not be the best choice for your medium-risk profile and long-term wealth creation goal.

The Case for Actively Managed Diversified Funds
Instead of sector funds, actively managed diversified funds are a better option. These funds invest across various sectors and industries, spreading the risk and potentially offering more consistent returns.

Professional Management: In actively managed funds, fund managers select and rotate sectors based on market conditions and economic trends. This allows for a more balanced and dynamic approach to investing.

Diversification: These funds spread investments across multiple sectors, reducing the risk of poor performance in any single sector.

Flexibility: The fund manager has the flexibility to shift allocations between sectors based on their research and market outlook, which can enhance returns over time.

Suggested Categories of Diversified Mutual Funds
Here are a few categories of diversified mutual funds that align with your goal of wealth creation and medium risk appetite:

1. Flexi-Cap Funds

Investment Strategy: Flexi-cap funds invest in companies of all sizes—large-cap, mid-cap, and small-cap—based on where the fund manager sees potential for growth.

Benefit: These funds offer flexibility in stock selection across market capitalizations, which can help balance risk and reward.

Suitability: Ideal for long-term wealth creation, as the fund manager can adjust the portfolio based on market conditions.

2. Large-Cap Funds

Investment Strategy: Large-cap funds focus on investing in well-established, blue-chip companies with a proven track record.

Benefit: These companies are less volatile and offer steady growth, making them a safer option within the equity space.

Suitability: Suitable for investors with a medium risk appetite who seek stability and consistent returns.

3. Multi-Cap Funds

Investment Strategy: Multi-cap funds invest across large, mid, and small-cap stocks, providing a diversified exposure to various market segments.

Benefit: These funds balance growth potential and stability, making them a good choice for long-term investors.

Suitability: Ideal for those who want a mix of stability from large caps and growth potential from mid and small caps.

4. Balanced or Hybrid Funds

Investment Strategy: Hybrid funds invest in a mix of equity and debt instruments, offering a balanced approach to risk and return.

Benefit: The debt component provides stability, while the equity component drives growth.

Suitability: These funds are suitable for medium-risk investors who want exposure to equity with a cushion of debt.

SIP Strategy for Long-Term Wealth Creation
1. Consistent Investment:

Stick to Your Plan: Invest consistently, regardless of market conditions. SIPs allow you to average out the purchase cost over time, which can enhance returns in the long run.

Increase SIP Over Time: As your income grows, consider increasing your SIP contributions. This can significantly boost your corpus over a 20-25 year period.

2. Regular Portfolio Review:

Annual Check: Review your portfolio annually to ensure it aligns with your financial goals and risk tolerance.

Rebalance When Needed: Rebalance your portfolio if certain funds underperform or if your financial goals change.

3. Stay Committed:

Long-Term Perspective: Stay committed to your investment plan for the entire 20-25 year period. This long-term approach is key to achieving substantial wealth creation.

Avoid Market Timing: Don’t try to time the market. Market timing is risky and can lead to missed opportunities. Focus on staying invested.

Why Avoid Index Funds and Direct Funds
1. Disadvantages of Index Funds:

Limited Returns: Index funds aim to replicate the performance of a specific index, offering average market returns. They lack the potential for outperformance.

No Downside Protection: Index funds are fully exposed to market downturns, as they do not have the flexibility to move out of underperforming sectors or stocks.

Lack of Active Management: These funds are passively managed, meaning there’s no professional fund manager making decisions to maximize returns.

2. Disadvantages of Direct Funds:

Lack of Guidance: Direct funds require you to make all investment decisions on your own. This can be challenging without professional guidance.

Potential for Mistakes: Without the advice of a Certified Financial Planner (CFP), you may make investment mistakes that could affect your returns.

Value of Regular Funds: Investing through a regular fund with a CFP gives you access to expert advice, fund management expertise, and ongoing support.

Final Insights
your goal of wealth creation over 20-25 years is achievable with the right strategy. Avoid sector funds due to their higher risk and lack of diversification. Instead, focus on actively managed diversified funds that offer flexibility, professional management, and a balanced approach to risk and reward. Stay committed to your SIPs, review your portfolio regularly, and avoid the pitfalls of index and direct funds. With this approach, you can confidently work towards your financial goals and build substantial wealth over time.

..Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 2024

Asked by Anonymous - Feb 22, 2024Hindi
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Hello Jigar ji. Pls suggest a few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years. Goal is wealth creation and risk apatite is medium. Thanks
Ans: Investing with a long-term horizon like 20-25 years provides a good opportunity to harness the power of compounding and potentially achieve significant wealth creation. Here are some sectors or categories you might consider for your SIP investment of 10 lakhs:

Large Cap Funds: These funds invest in large, well-established companies that are leaders in their respective industries. They generally offer stability and steady returns over the long term.
Multi-Cap Funds: These funds provide diversification across market caps, including large, mid, and sometimes small-cap stocks. They offer flexibility to the fund manager to capitalize on opportunities across the market.
Mid & Small Cap Funds: While riskier than large-cap funds, mid and small-cap funds have the potential to deliver higher returns over the long term. They are more volatile but can be rewarding if you have a long-term perspective.
Sectoral or Thematic Funds: If you have a particular interest or belief in a specific sector like technology, healthcare, or infrastructure, you might consider investing in sectoral or thematic funds. However, these should be a smaller portion of your portfolio due to their higher risk.
Balanced Advantage Funds: These funds dynamically manage equity and debt allocation based on market valuations. They aim to provide stable returns with lower volatility over the long term.
For a medium-risk appetite and a long-term horizon, a diversified portfolio with a mix of large-cap, multi-cap, and a small portion of mid & small-cap funds could be a suitable strategy. Remember, it's essential to review your portfolio regularly and make adjustments as needed based on market conditions and your financial goals. Consulting with a financial advisor can provide personalized advice tailored to your needs.

..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

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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