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How to get regular income from mutual fund SWP

1st of all I would like to congratulate you guys for this amazing platform you have provided for investers like us who do not have much of an exposure in this area, your efforts are simply commendable. On a different note I am looking to invest some money in the SWP that I have read so much about in the discussions on your website for a fixed monthly income. Could you please advise the best mutual funds right now with proven record to invest in, so that I can grow my capital along with a regular return on a monthly basis at say 8-9% per annum. Risk capability - low/medium Age - 62 Looking forward to your reply?

Apr 26, 2017 by Sharad, Panchkula  |   Mutual Fund

Thanks for the kind words which we truly appreciate. Glad that you liked our platform and found it useful.

It is a good idea to draw a fixed amount regularly through SWP route while remaining invested in the fund for the long term. For this purpose, without taking much risk, hybrid debt funds (MIPs) or hybrid equity funds (balanced funds) are good option. But choosing between the two also depends on your risk taking ability.

Since your risk profile is low to medium only hybrid debt funds will suit. In fact for low risk profile, even MIPs will not suit and you have to go with debt funds only.

However, you have mentioned that you want to grow your capital too! In that case, we suggest that balanced funds may be an ideal fit for you because of the following reasons -

1. Balanced funds invest upto 65% in equites and rest in debt, therefore, returns are superior to MIPs

2. Balanced Funds are tax efficient as long term capital gains (after 12 months) tax is free and so is the dividends. MIPs are taxed like debt funds and long term capital gain (after 3 years) is taxed @20% after indexation

3. In the long run (if you can invest for 5 years at least) balanced funds can give your good capital appreciation apart from

But should you still invest in balanced funds only due to the above benefits as your risk profile is low/medium? The answer is no, if you do not want to increase your risk profile from low/medium to medium to moderately high.

The answer could be yes, if you can increase your risk appetite a bit to moderate / moderately high as you want your capital to grow.

While selecting best balanced funds for your SWP needs, you can choose from ICICI Prudential Balanced Fund, HDFC Balanced Fund, SBI Magnum Balanced Fund and L&T India Prudence Fund.

The other suggestion is that you should not draw more than 8-9% during the initial years. For example - On an investment of Rs 1 Lakh, you should not draw more than Rs 750 in the initial years. You should check the fund value regularly and review your portfolio once every year and increase the monthly withdrawals as and when you find that your investment has enough surpluses!

Have you checked how SWP works, try this tool https://www.advisorkhoj.com/mutual-funds-research/mutual-fund-swp-investment-calculator

Also, check here the top performing balanced funds which gave the best SWP returns https://www.advisorkhoj.com/mutual-funds...

Hope you find the above useful. Do write back to us in case you have some further queries.

Thanks for writing to Advisorkhoj

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