I have sold property for 1 cr. I dont wish to buy property again. I would invest around 35 lakh in Eligible bonds for saving LTCG. and remaining 65 lakh (fair value after indexation) I want to invest in SWP. I wish to have 0.5% per month as income for rent along with further appreciation of my money 65 lacs. Can you please suggest best combination of MFs for SWP in my case. I m in a pensionable job, with no liability and age 49. Thanx

Ans: Investing Rs. 65 lakh in a Systematic Withdrawal Plan (SWP) from Mutual Funds is a strategic move. Let's delve into the details of making this plan work effectively for you, providing both income and appreciation.

Understanding SWP: An Overview
A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. This plan suits retirees or anyone seeking a steady income stream.

Importance of SWP for Your Goals
You aim for a monthly income of 0.5% from Rs. 65 lakh, equating to Rs. 32,500. Additionally, you desire capital appreciation to grow your wealth. SWPs can cater to both needs, offering flexibility and potential growth.

Why Choose Mutual Funds for SWP?
Mutual funds provide diversification, professional management, and the potential for higher returns compared to traditional savings options. They also offer the flexibility to choose from various schemes based on risk appetite and goals.

Categories of Mutual Funds for SWP
Equity Mutual Funds: These invest in stocks and have high growth potential. Suitable for long-term investments, they offer significant capital appreciation.

Hybrid Mutual Funds: These funds invest in a mix of equity and debt instruments, balancing growth and stability. They are ideal for moderate risk-takers.

Debt Mutual Funds: These invest in fixed-income securities like bonds and are less volatile. They offer steady returns and are good for conservative investors.

Balanced Advantage Funds: These dynamically adjust their equity and debt exposure based on market conditions. They provide stability with some growth potential.

Crafting the Perfect Combination
To achieve a balance between monthly income and capital appreciation, a diversified approach is key. Here's a suggested mix:

1. Equity Mutual Funds
Large-Cap Funds: Invest in well-established companies with stable returns. Suitable for the core of your portfolio.

Multi-Cap Funds: Invest across market capitalizations, providing a balance between large, mid, and small-cap stocks.

Focused Funds: Invest in a concentrated portfolio of high-conviction stocks, offering the potential for high returns.

2. Hybrid Mutual Funds
Aggressive Hybrid Funds: These invest 65-80% in equities and the rest in debt. They provide growth potential with some safety net.

Balanced Hybrid Funds: They maintain a 50-50 split between equity and debt, balancing risk and reward.

3. Debt Mutual Funds
Corporate Bond Funds: Invest in high-quality corporate bonds, providing stable returns.

Short Duration Funds: Suitable for reducing interest rate risk, offering moderate returns with lower volatility.

Dynamic Bond Funds: These adjust their portfolio based on interest rate movements, aiming for optimal returns.

4. Balanced Advantage Funds
These funds dynamically manage their equity and debt allocation, offering stability with growth potential. They adjust based on market conditions, making them suitable for varied market scenarios.
Implementing Your SWP Strategy
Step-by-Step Approach:
Allocate Funds: Distribute Rs. 65 lakh across chosen mutual funds. Example allocation:

40% in Equity Mutual Funds
30% in Hybrid Mutual Funds
20% in Debt Mutual Funds
10% in Balanced Advantage Funds
Set Up SWP: Decide the monthly withdrawal amount. Rs. 32,500 per month equals 0.5% of Rs. 65 lakh.

Monitor and Rebalance: Regularly review your portfolio. Rebalance annually to maintain the desired allocation and adapt to market changes.

Advantages of Using SWP
Regular Income: Provides a steady cash flow, perfect for supplementing your pension.

Tax Efficiency: Capital gains on mutual funds are taxed at a lower rate than traditional income, offering tax efficiency.

Flexibility: You can modify the withdrawal amount or stop SWP anytime, providing control over your finances.

Potential for Appreciation: Unlike fixed deposits, mutual funds can appreciate in value, growing your wealth over time.

Risks to Consider
Market Volatility: Equity funds are subject to market fluctuations. Diversification and hybrid funds help mitigate this risk.

Interest Rate Risk: Affects debt funds, particularly long-duration ones. Short-duration and dynamic bond funds can reduce this risk.

Withdrawal Risk: Excessive withdrawals can deplete your capital. Set a sustainable withdrawal rate.

Power of Compounding
Investing in mutual funds allows your money to grow through compounding. Reinvesting returns leads to exponential growth over time, maximizing your wealth.

Evaluating Actively Managed Funds
Disadvantages of Index Funds: Index funds passively track indices and may underperform actively managed funds. They lack the flexibility to adapt to market changes.

Benefits of Actively Managed Funds: Fund managers can make strategic decisions to outperform benchmarks, potentially providing higher returns.

Importance of Regular Funds Through MFD
Disadvantages of Direct Funds: Direct funds require extensive market knowledge. They lack the professional advice and service provided by Mutual Fund Distributors (MFD).

Benefits of Regular Funds: Investing through an MFD with CFP credentials ensures professional guidance, strategic planning, and regular portfolio reviews.

Personalized Investment Strategy
Given your pensionable job and no liabilities, an aggressive yet balanced approach suits you. The mix of equity, hybrid, debt, and balanced advantage funds offers growth with stability.

Building a Resilient Portfolio
Diversification: Spreading investments across categories reduces risk and optimizes returns.

Regular Monitoring: Periodic reviews and rebalancing ensure alignment with your goals and market conditions.

Professional Guidance: A Certified Financial Planner provides expert advice, helping you make informed decisions and achieve financial goals.


You've made a wise decision to invest in SWP for a regular income stream. Your strategy to balance income with growth reflects prudent financial planning. Understanding the nuances of SWP and mutual funds can be complex, and your proactive approach is commendable.

Final Insights
Investing Rs. 65 lakh in mutual funds through an SWP is a strategic move for a steady income and potential growth. Diversifying across equity, hybrid, debt, and balanced advantage funds balances risk and reward. Regular monitoring and professional guidance ensure your investment aligns with goals and market conditions. Embrace this plan for a financially secure and prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in