Which mutual fund is best to invest for regular return

Your annual income need is Rs 4.8 lakhs, which means you need 9.6% regular returns from your Rs 50 lakhs investment. While equity oriented funds can give double digit returns on an annualized basis in the long term, one cannot expect funds to give double digit returns every year. The problem investors opting for SWP face is that, they need to make withdrawals even when the market falls. In such a situation, especially if it happens early in the investment tenure, investors deplete their invested money and therefore get lower returns in the future.

Since you are a retired investor, such a scenario will be detrimental to your long term financial situation. In our opinion, you should lower your withdrawal rate to 7 – 8% annually in the initial years of the investment and let your money grow through capital appreciation. Once your money has grown, you can increase your withdrawal rate. Since you are retired it is prudent to invest in funds with moderate risk profiles like Balanced Funds and Debt Oriented Hybrid Funds. Please see top most consistent balanced funds in our tool Top 10 Mutual Funds in India – Balanced Funds Equity Oriented. Please see top most consistent debt oriented hybrid funds in our tool Top 10 Mutual Funds in India – Hybrid Debt Oriented Funds. Depending on your risk appetite, you can choose funds from either categories (please note debt oriented hybrid funds are less risky than balanced funds). All these funds have direct plans.

Read how SWP from balanced mutual funds is a smart option to get regular returns

You should defer your SWP by one year or the exit load period, whichever is longer because otherwise, you will get hit both by short term capital gains tax and exit load. Further please note that, if you make SWP withdrawals from debt oriented hybrid funds you will have to pay tax on the profits made by redeemed units as per your income tax rate.

Since your daughter’s marriage is 5 years away, you can invest in long term debt funds or income funds. They can give better returns than short term debt funds. Though income funds are subject to more interest rate risk than short term debt funds, over a 5 years period, you will have periods of both rising and falling rates and the effects will cancel out each other. If you want to opt for a safer approach for your daughter’s marriage, you can invest 50% of the corpus in income funds and 50% in short term debt funds. Please see top most consistent income funds in our tool Top 10 Mutual Funds in India – Income Funds. Please see top most consistent short term debt funds in our tool Top 10 Mutual Funds in India – Short Term Debt Funds.

Hope you find our suggestions useful.