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Ramalingam Kalirajan |8334 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

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

Question by Arvind on May 13, 2024Hindi

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Very nice advice by you Sir,I really appreciate your approach to help the invester whatever his financial standing is. Actually I made a mistake in monthly Withdrawal amount as 300000 instead of Rs 30000. Please give me rough idea about the amount one should investin Balanced SWP fund to get rs 30000 per month

Ans: Systematic Withdrawal Plan (SWP):

Determining Investment Amount: The amount you need to invest in an SWP to get Rs. 30,000 monthly depends on various factors like:

Current corpus in the mutual fund scheme
Expected rate of return
Investment tenure (how long you plan to withdraw monthly)
Taxation on SWP Withdrawals: Yes, withdrawals from SWP are generally taxable.

Short-term Capital Gains (STCG): If you invested in the fund within the last year, withdrawals are taxed at your income tax slab rate.
Long-term Capital Gains (LTCG): If you invested for over a year in equity funds, gains exceeding Rs. 1 lakh per year are taxed at 10%.
Alternative: Monthly SIP from FD Income:

Potential Benefit: Investing your monthly FD income in SIPs can be beneficial for long-term wealth creation. Equity markets have the potential for higher returns compared to FDs. Actively managed funds involve experienced fund managers who try to pick stocks to outperform the market. Actively managed funds come with higher fees compared to passively managed funds.

Important Consideration: SIPs are for long-term investment horizons (typically 5+ years). Equity markets can be volatile in the short term.

Recommendation:

Consult a Certified Financial Planner (CFP): A CFP can analyze your situation, risk tolerance, and retirement goals. They can recommend the right investment approach (SWP or SIP) and suggest suitable mutual fund schemes.
Here's a quick example (not a recommendation):

Current Corpus: Rs. 50 lakh
Expected Return: 8%
Investment Tenure: 15 years
Based on these assumptions, you might need to invest a larger amount in an SWP to generate Rs. 30,000 monthly. However, this is a simplified example, and a CFP can provide a more accurate calculation.

Remember:

Focus on Long Term: Prioritize a long-term investment horizon for SIPs.
Tax Implications: Understand the tax implications of SWP withdrawals.
Professional Guidance: Consulting a CFP is recommended for a personalized retirement plan.
By consulting a CFP, you can develop a strategy that meets your income needs and maximizes your retirement savings!
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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.