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Is SWP from midcap mutual funds right

Thank you for your suggestion, Presently, I am interested to invest Rs 10L in MF with SWP Option. I had searched and found some MF -( 9 Nos - listed below and link attached for ref.) Which are suitable for SWP of Rs 20000/pm for my house partial expenditure perpose. Please once again suggest me 6 Nos most suitable MF-SWP for investment from the list OR any other MF-SWP from your end. Birla Sun Life Small & Midcap Fund - Plan, DSP BlackRock Micro Cap Fund - Plan, Franklin India Smaller Companies Fund - Plan, Kotak Emerging Equity Scheme - Plan, L&T Midcap Fund - Plan, Mirae Asset Emerging Bluechip Fund - Plan, Reliance Small Cap Fund - Plan, SBI Small & Midcap Fund - Plan, Sundaram S.M.I.L.E. Fund - Plan. Please find attached my MF-SWP selection Chart and web link Chart - https://goo.gl/gU88im?

May 22, 2017 by G. Ravi, Hyderabad  |   Mutual Fund

Your idea of drawing a regular income through SWP is good but the funds selected by you may not be ideal for this purpose. Please note that investing in mid & small cap funds has the highest risk and drawing regularly from these funds may harm your long term investment needs.

Moreover, your idea of drawing Rs 20,000 per month from an investment of Rs 10 Lakhs is very high. In fact you want to draw 2% per month! We think this will severely harm your long term returns and deplete the corpus very fast

To draw regular return from mutual funds, balanced funds are better option. You can invest in balanced funds and draw 8-9% annual (around 0.75% monthly) after one year from the date of lump sum investment in the balanced funds. This will ensure that gains made on each SWP withdrawal after one year is tax free!

However, if you want to draw through SWP from mid and small cap funds or any other equity fund, you should give the fund sufficient time to grow and then you can decide to withdraw. Starting the SWP immediately after the lump sum investment is not suggested. Moreover, you should not draw more than 8-9% annual from your investments in balanced funds or equity funds.

Hope the above helps! Thanks for writing to Advisorkhoj.

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