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Can you please review my balanced fund SWP

Recently (one month back) I had invested 27 Lakhs in Balanced Mutual Funds. Breakup is like this - Motilal Oswal Dynamic Equity Fund (Balance Fund) - 9 Lakhs, L&T Prudence Fund (Balance Fund) - 9 Lakhs, Birla Sun Life 95 Balanced Fund - 9 Lakhs. From all of above these three Balanced Funds I am taking 8% per month as SWP i.e. 18000 Per month. Please suggest my mutual fund selection is okay or I have to change. And 8% as SWP is okay or I have to reduce this amount. I have a time horizon of 10-12 years and expecting 1 to 1.25 Crore after deducting SWP in 10 years. Is my expectation is right? Please guide me on my queries?

Dec 6, 2016 by Sumit Bisla, Faridabad  |   Mutual Fund

The funds you have selected are okay. The monthly SWP withdrawal amount of Rs. 18,000 from investment corpus of 27 Lakhs is also right! Therefore, you need not increase or decrease the monthly SWP amount and should continue with the same.

However, in future, if you find that the market is doing good and your corpus is also increasing then you might think of increasing the monthly withdrawal amount at least to the extent of prevailing inflation rate at that point in time.

For example, you are now withdrawing Rs. 18,000 per month and after 1 year the inflation rate is 5% then you might think of withdrawing Rs. 18,900.

With regards to increase in corpus after 10-12 years, post SWP withdrawals, it is difficult to answer. However you may refer to historical returns based on your example and may guess this. But as I said, you can only guess based on certain rate of return %, as past performance of mutual fund is no assurance of future returns.

Now, let us see what was the past performance ? We have calculated based on the historical performance of Birla Sun Life Balanced 95 Fund in which you have already invested 9,000 and withdrawing 6,000 per month. we have assumed the investment date as 1st December 2004. Following is the result -

You have withdrawn 8.64 Lakhs through 145 installments in the last 12 years and the current value is 35.28 Lakhs.

You may check the results here https://www.advisorkhoj.com/mutual-funds...

Hope the above helps! Thanks for writing to Advisorkhoj !!

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