I want to invest Rs1.00 cr in mutual fund for SWP Which funds should I select to get Rs.60,000/- every month with annual increase in withdrawal

Ans: Debt funds can be used, however, the returns are subject to market risk.

• HDFC Banking and PSU Debt Fund
• ICICI Prudential Constant Maturity Gilt Fund

Ans: It's wonderful that you're considering investing in a Systematic Withdrawal Plan (SWP) to generate a steady income stream during your retirement years. Given your investment horizon and income requirement, it's essential to choose a fund that balances growth potential with stability.

For your SWP scheme, you may want to consider investing in a balanced or hybrid fund. These funds typically allocate a portion of their assets to equities for growth potential and the remainder to debt instruments for stability.

Balanced funds aim to provide a blend of capital appreciation and income generation by investing in a mix of equities and debt securities. They can be suitable for retirees looking for a steady income stream while also seeking potential growth opportunities.

When selecting a balanced fund, look for one with a consistent track record of performance, low expenses, and a seasoned fund manager. Additionally, consider the fund's asset allocation, risk profile, and investment strategy to ensure it aligns with your financial goals and risk tolerance.

It's crucial to review your investment periodically and make adjustments as needed to ensure your portfolio remains aligned with your income requirements and financial goals.

Before making any investment decisions, I highly recommend consulting with a Certified Financial Planner who can assess your retirement needs and recommend a suitable SWP scheme tailored to your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Investment Considerations
Investment Amount: Rs 40 lakhs
SWP Objective: Regular monthly income
Risk Appetite: Moderate
Investment Horizon: Long-term
Recommended Fund Types for SWP
Balanced Advantage Funds
Features: These funds balance equity and debt, offering growth with reduced volatility. Ideal for generating regular income through SWP.
Hybrid Debt-Oriented Funds
Features: These funds invest predominantly in debt with some exposure to equity. They offer stability and moderate returns, suitable for SWP.
Equity Savings Funds
Features: These funds use a mix of equity, debt, and arbitrage opportunities. They provide stability with a potential for better returns.
Expected Returns and Monthly SWP
Expected Annual Returns
Balanced Advantage Funds: 8-10%
Hybrid Debt-Oriented Funds: 7-9%
Equity Savings Funds: 8-10%
SWP Calculation
Assuming an 8% annual return, let's calculate the monthly SWP:

Initial Investment: Rs 40 lakhs
Annual Return: 8%
Monthly SWP: We aim for a sustainable withdrawal rate, typically around 5-6% of the corpus annually.
Monthly SWP Amount
Annual Withdrawal: Rs 40,00,000 * 5% = Rs 2,00,000
Monthly SWP: Rs 2,00,000 / 12 ≈ Rs 16,667
With a 6% annual withdrawal rate:

Annual Withdrawal: Rs 40,00,000 * 6% = Rs 2,40,000
Monthly SWP: Rs 2,40,000 / 12 ≈ Rs 20,000
Final Insights
Balanced Advantage Funds: Suitable for moderate risk appetite with growth and stability.

Hybrid Debt-Oriented Funds: Ideal for lower risk and stable income.

Equity Savings Funds: Good for balancing risk and returns with stable income potential.

Sustainable SWP: With Rs 40 lakhs, expect Rs 16,667 to Rs 20,000 monthly.

Regularly review the performance and adjust the SWP as needed to ensure it aligns with your financial goals and market conditions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello, i am glad you have the knowledge of SWP and you wise to invest in Mutual funds for the same
For an SWP of 1L per month, you have to invest 2crs ( SWP rate is 6% )
Looking at your age and since i don't have the understanding of your other investments, you should make a balanced portfolio
Listing the funds as follows which we have to invest using an STP of 10 to 20 weeks :
Aggressive Hybrid - 10%
Large and mid cap - 20%
Multicap - 20%
Mid cap - 20%
Small cap - 20%
Thematic funds - 10%

SWP can be started when the STP is fully done

Do let me know your views on this on my LinkedIn profile, attaching my profile :
https://www.linkedin.com/in/ca-vivek-lala-21a2038b?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=android_app

Ans: Hi Deepak,

You can choose a good debt fund to invest your money for SWP of 25000. Need to tell me for how long you need this withdrawal to give an initial investment number.
- if you need 25k monthly for 10 years, you will need 21.5 lakhs investment giving 8% annual return.
- if you need 25k monthly for 20 years, you will need 31 lakhs investment giving 8% annual return.
- if you need 25k monthly forever, you will need 40 lakhs investment giving 8% annual return.

But this withdrawal is not inflation adjusted. You will need to increase this amount substantially.

You can choose to work with a professional Certified Financial Planner - a CFP who can guide you with exact strategy to invest in keeping in mind your age, requirements, financial goals and risk profile. A CFP periodically reviews your portfolio and suggest any amendments to be made, if required.

Let me know if you need more help.

Best Regards,
Reetika Sharma, Certified Financial Planner
https://www.instagram.com/cfpreetika/