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Can I earn Rs 30,000 monthly returns on Rs 50 lakhs?

Janak

Janak Patel  |31 Answers  |Ask -

MF, PF Expert - Answered on Mar 26, 2025

Janak Patel is a certified financial planner accredited by the Financial Planning Standards Board, India.
He is the CEO and founder of InfiniumWealth, a firm that specialises in designing goal-specific financial plans tailored to help clients achieve their life goals.
Janak holds an MBA degree in finance from the Welingkar Institute of Management Development and Research, Mumbai, and has over 15 years of experience in the field of personal finance. ... more
Asked by Anonymous - Mar 14, 2025Hindi
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Hello Sir, I have saving 50 lakhs, i am looking for monthly return of 30 k What the best to possible way to invest this amount. Is it good option to invest in index fund . Please advice

Ans: Hi,

You have not clarified the duration of your requirement, how long do you need monthly return?
But lets assume this is as long as possible.
There are many solutions to this and that involves knowing a lot more about you and your life state but will anyways will provide you a couple of options.
1. Fixed income investment - Invest in FD's at 7%, this will earn you 3.5 lakhs a year and should be covering your requirement. But the savings will remain at 50 lakhs. If the rate on FD falls down, then you will end up using your savings to cover your requirements. So this option may not be feasible for a long period. The risk being low, it may not grow your saving and it can erode your saving too.
2. Invest in Equity (mutual funds) - You mentioned Index funds, they can be considered along with other equity mutual funds too. But understand, there is a higher level of risk involved. Markets are and will be volatile and the returns will not be the same each year. If you have the temperament/patience to stay invested in market fluctuations then venture in this direction. When you are looking to fulfill your requirement each month, your investment will always stay on your mind and this will trigger behavioral traits and hence I mention temperament. Many people get unsettled seeing their investments erode in a short period of time and take decisions which are not rationale. Hence enter knowing the risk and yourself.
3. Middle ground - Invest in balanced option - something like a hybrid fund. If you are conservative (low risk), then go for conservative hybrid mutual fund schemes (more Debt and less equity) and expect returns slightly above your FD in the range of 8-9% which will serve your requirement and can add a bit to your savings. If you are not conservative and understand that market linked investment can provide a little extra boost to your investment then balance your risk with Balanced advantage Mutual Fund schemes (balanced approach to equity and debt). These schemes can provide you better returns up to double digits 10-12% and hence after meeting your requirements, your investment can grow too.

Please understand, Equity brings in market risks and hence have expectations but also understand the risks involved. Make your decision based on the appetite you have for loss bearing and safety and accordingly go ahead. Consult a good advisor or a financial planner who can guide you after knowing more about you and your requirement and also help understand tax implications.

Thanks and Regards
Janak Patel
Certified Financial Planner.
Asked on - Mar 26, 2025 | Not Answered yet
Thank you Sir, Much Appreciated
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  |8319 Answers  |Ask -

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

Asked by Anonymous - Mar 03, 2024Hindi
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I am 53 year. I want to invest Rs 10,000 every month. What is the best option to invest so that after 4/5 years I get good return
Ans: Maximizing Returns with Monthly Investments
Investing regularly is a prudent financial decision, and I commend your commitment to building wealth even at 53. Let's explore the best options for investing ?10,000 every month to achieve good returns within a 4-5 year timeframe.

Understanding Investment Objectives
Short-Term Horizon: With a 4-5 year investment horizon, it's essential to prioritize investments with moderate risk and potential for decent returns.

Goal Clarity: Define your specific financial goals and the purpose of the invested funds to align investment strategies accordingly.

Risk Appetite: Assess your risk tolerance to determine the appropriate mix of investment options for your portfolio.

Evaluating Investment Options
Considering your investment horizon and return expectations, explore the following options:

Equity Mutual Funds: Offer the potential for higher returns but come with higher volatility. Suitable for investors with a longer investment horizon and higher risk tolerance.

Debt Mutual Funds: Provide stability and steady returns with lower risk compared to equity funds. Ideal for investors seeking capital preservation and income generation.

Balanced Funds: Combine equity and debt components to provide a balanced approach to risk and return. Suitable for investors seeking moderate growth with reduced volatility.

Benefits of Actively Managed Funds
Active management offers several advantages for investors with a short-to-medium-term investment horizon:

Potential for Outperformance: Skilled fund managers actively manage the portfolio, aiming to generate alpha and outperform the market.

Risk Management: Experienced fund managers employ risk management techniques to mitigate downside risk and preserve capital, crucial for investors with a shorter investment horizon.

Flexibility: Active management allows for tactical allocation adjustments based on market conditions and economic outlook, optimizing returns.

Disadvantages of Index Funds
Index funds may not be suitable for investors seeking good returns within a 4-5 year timeframe due to the following reasons:

Market Tracking: Index funds passively track a specific index, limiting the potential for alpha generation and outperformance compared to actively managed funds.

Lack of Flexibility: Investors in index funds cannot benefit from active management strategies such as sector rotation or stock selection, which are crucial for optimizing returns in volatile markets.

Market Volatility: During periods of market volatility, index funds may experience higher drawdowns compared to actively managed funds, posing a risk to capital preservation.

Conclusion
Considering your investment horizon of 4-5 years, a balanced approach with a mix of equity and debt mutual funds may be suitable to achieve good returns while managing risk. By investing systematically and regularly reviewing your portfolio, you can work towards achieving your financial goals effectively.

Remember to consult with a Certified Financial Planner to tailor an investment strategy that aligns with your specific needs and objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8319 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 20, 2025

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Hello I am saving 2 lakh per month monthly I want to invest 1 lakh per month in mutual fund can you please advise what is the best approach to achieve 50 lakhs in short term year
Ans: You aim to accumulate Rs 50 lakh in one year by investing Rs 1 lakh per month. Achieving this goal requires careful planning and investment selection. Let's explore the right approach and strategies for your situation.

Target Assessment and Strategy
Rs 50 lakh in one year is an aggressive target.
To reach Rs 50 lakh, you need to generate high returns.
This will require careful consideration of investment options.
Investment Approach for Short-Term Goals
1. Focus on Equity Mutual Funds

For short-term goals like this, equity mutual funds provide the best potential for growth.
Opt for large-cap funds for stability with moderate growth.
Include mid-cap funds for higher growth opportunities with manageable risk.
A small allocation to small-cap funds can further boost returns. However, small-cap funds are more volatile and should be approached cautiously.
2. Hybrid Funds for Risk Balance

Consider adding balanced or hybrid funds to reduce overall risk.
These funds invest in both equity and debt, providing stability.
Suitable for short-term goals with a balanced risk appetite.
Regular SIP Strategy for Better Returns
SIPs will help you invest systematically and manage market volatility.
By investing Rs 1 lakh monthly, you average the cost of your investment over time.
In a short-term goal like this, SIP in equity funds can work well, but the market's timing and volatility matter.
Active vs. Passive Funds
Active Funds

Actively managed funds offer higher return potential in volatile markets.
They provide flexibility to fund managers to adapt to changing market conditions.
Suitable for achieving high returns in the short term.
Passive Funds (Index Funds)

Index funds track market indices and are generally not the best for short-term high growth.
They are a safer investment but may not yield the high returns needed to reach Rs 50 lakh quickly.
Active funds, in comparison, offer more tailored strategies and can outperform in certain market conditions.
Risk Management and Allocation
Given the short-term nature of your goal, be prepared for market fluctuations.
Balance your portfolio by allocating across large, mid, and small-cap funds.
Monitor your investments frequently and adjust if needed.
Diversifying will help protect your investment from large losses.
Importance of Monitoring and Rebalancing
Rebalancing your portfolio regularly is crucial, especially in the short term.
Stay updated on market trends and adjust your investments as necessary.
Consult a Certified Financial Planner to review and optimize your strategy.
Tax Efficiency Considerations
Long-term capital gains (LTCG) from equity funds are taxed at 12.5% above Rs 1.25 lakh.
Short-term capital gains (STCG) are taxed at 20%.
Since this is a short-term goal, STCG taxes will likely apply, reducing your returns slightly.
Avoid Direct Investment Plans
Direct mutual fund investments bypass advisors but may lack personalized strategy.
Without expert guidance, you may face higher risk and poor fund selection.
Regular funds, through an experienced advisor or a Certified Financial Planner, offer tailored strategies.
Final Insights
To achieve Rs 50 lakh in one year with Rs 1 lakh monthly investments, equity mutual funds are the most suitable option. Focus on large-cap, mid-cap, and hybrid funds. Be mindful of risks and monitor your portfolio regularly. Given the short-term nature of your goal, active management will give you the best chance to reach your target.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8319 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 05, 2025

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Dear Sir, I am aged 40 years a aggressive investor I have recent corpus of 13 lac in mutual fund and doing SIP of Rs30500 monthly in following funds . Nippon small cap - 9000 , Tata small cap - 7500 , Quant Small cap - 6000 , kotak small cap - 5000 and Pgmi Flexi cap -3000 and a vision for next 22 years with step up of 10 %. I also invest in PPF of 12500 monthly and In EPF with 25000 basic salary and i will also get Rs 50 lac from various LIC policy at the age of 60 . I want to know that is my approach is right and what would be the future corpus at the age of 62 years .
Ans: You are doing a disciplined and smart job with your investments. You have a long-term horizon, a strong SIP commitment, and a clear goal in mind. That’s a big step many don’t take seriously. Let me now evaluate your approach from all angles. This will be a 360-degree review of your investment plan and future readiness.

Let us go step-by-step to understand if your approach is right and what the future looks like.

Your Current Financial Setup

You are 40 years old now.

You have a mutual fund corpus of Rs 13 lakh.

You invest Rs 30,500 monthly through SIP.

You invest in four small cap funds and one flexi cap fund.

You step up your SIP by 10% annually.

You have a PPF investment of Rs 12,500 monthly.

You contribute to EPF. Your basic salary is Rs 25,000.

You will receive Rs 50 lakh from LIC policies at age 60.

Your investment horizon is 22 years from now.

This is a solid plan and shows discipline. Now, let us evaluate it carefully with insights and suggestions.

Assessment of Mutual Fund Investments

You are investing heavily in small cap mutual funds.

Four out of five funds are from the small cap category.

Small caps give high returns, but they also carry high risk.

Over 22 years, this risk may work in your favour.

But the ride will be bumpy. There will be sharp ups and downs.

At times, you may see short-term losses. That is normal.

However, putting over 85% of SIP in small caps may be risky.

You need better diversification for stability.

Adding large cap and mid cap funds may balance the risk.

Your Flexi cap fund does help a bit, but it is still not enough.

A blend of market caps will give smoother long-term growth.

It is better to slowly bring down small cap exposure to 50%.

Increase exposure to diversified and mid-cap funds gradually.

Don’t exit small cap funds suddenly. Take a phased approach.

This change will make your portfolio strong and well-balanced.

Step-Up SIP Strategy – Strong and Effective

Increasing SIP by 10% annually is a smart idea.

This fights inflation and grows your wealth faster.

It uses your rising income to build a big corpus.

Many investors ignore step-up. You are doing it correctly.

Keep increasing the SIP without fail every year.

Even a break in step-up can delay your target.

Review your SIPs yearly and adjust as income rises.

This strategy will help you reach your target corpus faster.

Investment in PPF – A Safe Long-Term Cushion

PPF offers guaranteed, tax-free interest.

You are investing Rs 12,500 monthly in PPF.

Over 22 years, this will become a strong safe corpus.

It adds stability to your overall financial plan.

PPF is good for retirement since it is risk-free.

Keep continuing till maturity. Do not withdraw early.

Interest rate may vary, but long-term returns are good.

You also get tax exemption under Section 80C.

This risk-free asset will protect you from equity market shocks.

EPF – A Reliable Retirement Contributor

Your EPF is linked to your Rs 25,000 basic salary.

The employer also contributes monthly.

Over 22 years, this will grow into a big amount.

EPF offers fixed, tax-free returns with no market risk.

It is an excellent tool for retirement planning.

Avoid premature withdrawals from EPF.

You can withdraw after retirement for use as income.

This will be a strong pillar of your retirement security.

LIC Maturity at Age 60 – A Special Boost

You will receive Rs 50 lakh from LIC policies at age 60.

This will come at a perfect time near retirement.

You must check if these are traditional or ULIP plans.

Traditional plans offer low returns, mostly below inflation.

ULIPs carry market risk and high charges.

If these are investment-cum-insurance plans, surrendering is wise.

You can reinvest that surrender amount in mutual funds.

Use proper asset allocation while reinvesting.

For insurance needs, use only term insurance.

Reinvesting in mutual funds can make this Rs 50 lakh grow further.

Future Corpus at Age 62 – What to Expect

With SIPs, EPF, PPF and LIC money, your total savings will be huge.

Your mutual fund corpus will grow rapidly with step-up.

Your PPF and EPF will grow safely, year after year.

LIC amount will give a big boost just before retirement.

With 10% SIP step-up, your corpus can cross Rs 9 to 10 crore.

Exact figure depends on market returns, SIP discipline, and inflation.

But you are definitely on the right path to reach financial freedom.

You are preparing for retirement very well.

This kind of planning gives peace of mind and confidence.

Things You Are Doing Right – A Quick Look

Strong SIP discipline and long-term vision.

Investing in equity for long-term wealth creation.

Following step-up SIP approach.

Investing in PPF and EPF for safe returns.

Keeping investment horizon of 22 years.

Maintaining separate LIC maturity plans.

You are showing smart behaviour as an aggressive investor.

Key Improvements You Should Consider

Reduce small cap exposure to 50% slowly.

Add more mid-cap and flexi cap funds.

Avoid overlapping funds from same category.

Review performance of all funds every 6 months.

Check expense ratios and consistency of returns.

Track goal progress once a year with clear targets.

Make sure your portfolio has good asset allocation.

Don’t hold funds only based on past returns.

Always go through a Certified Financial Planner for changes.

This will make your portfolio more stable and return-oriented.

Important Taxation Insight

Long-Term Capital Gains above Rs 1.25 lakh are taxed at 12.5%.

Short-Term Capital Gains are taxed at 20%.

Plan redemptions smartly to reduce tax.

Use staggered withdrawals near retirement.

Redeem equity funds over time, not all at once.

PPF and EPF are tax-free. LIC maturity is also tax-free.

But for mutual funds, plan redemptions with tax efficiency.

This will help you protect your wealth from tax erosion.

Important Notes on Fund Types and Investments

Do not use direct mutual funds if you are not an expert.

Direct funds need self-review and research, always.

There is no handholding or guidance with direct funds.

If you miss fund underperformance, losses may happen.

Regular funds through MFD with CFP advice are safer.

CFP will do goal review, fund analysis and rebalancing.

This adds value and protects your goals from derailment.

Always go through a trusted CFP for a 360-degree plan.

Your long-term wealth deserves the right expert attention.

Finally – Our Insights for You

You are on a great track with vision and discipline.

You are investing smartly across equity and debt.

With minor changes, your plan can become stronger.

Keep focus on diversification and risk management.

Review your goals and progress yearly with expert help.

Stick to your plan even during market falls.

Continue your SIP step-up and never skip contributions.

Use professional guidance to ensure smooth journey.

Your retirement will be financially independent and stress-free.

This approach will help you lead a proud, peaceful life post-60.

Stay committed and consistent. You are doing excellent already.

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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