Hi Mr. Sreekanth
Please advise me on best debt fund for a SWP for making home & car mortage payments and home expenses. I am a 69 years old NRI living in US and requires about $2000 per month. I invested Rs. 2.36 Cr in three UTI’s equity funds which are giving me decent returns. I already booked profit of Rs. 27 Lakhs in the last four months and invested Rs. 15 Lakhs in SBI Magnum Medium Duration Fund with a SWP. Safety and regular flow of funds were the reasons behind this fund. Since the return here is very insignificant I am hesitating to add the remaining Rs.12 Lakhs to this fund. My SWP will commence beginning of 2021. Your advise will be much appreciated.
My goal is to book profits till I match my initial investments and reinvesting in debt funds for safety & regular flow of funds for expenses.
Thank you & best regards
Mohammed Abdul Bari
Dear Mohammed ji,
Apologies for my late reply! I was so very sorry to hear of your wife’s passing!
May I know if you have taken your decision regarding the above mentioned query?? or Are you still looking for some suggestion(s)??
Dear Mohammed ji,
Are these funds with Growth Option or Dividend option?
As of today, by God’s grace you have been making profits and booking them, what is the guarentee this will repeat in the near and medium term??
If your investments make (unrealized) losses, what is your Plan B?
May I know the interest rates of your Car and Home mortgages?
Dear Mohammed ji,
My suggestion would be to clear your debts. My personal preference is to be debt free (always).
You may retain mortgage loan if you think that your portfolio can deliver better returns.
The redemption process involves risk and tax implications. So, not sure if profit booking is right at all times.
Also, frequent profit booking may not be advisable.
May I know your investment objective to pick Equity funds? Is it for regular profit booking or long term wealth creation?
Also, SWP from Debt funds or hybrid funds can involve risk. As, debt funds does not guarantee you positive returns..
Dear Mr. Sreekanth,
Thank you sir once again for your valuable advice. Here is the reason for my investment in equity. My apologies for this lengthy missive. I needed to explain this to you.
Long term investment to generate wealth and manage my monthly expenses in US. I need around $2000 per month to live and this includes my home & car mortgage payments. I don’t have any source of income in US. I am dependent on my investment income and income generated from rental properties in India. About 50% of my rental property income meets 50% of my expenses here in US the rest is utilized in India.
I realized the returns from debt funds are not encouraging but if I book profit I need a safe place to park my funds to see me through my monthly payments here in US. If you know of a better place to park generated profit, please advise, it would be much appreciated.
In the past I missed out on booking profits and lost opportunity to create wealth. Hence, the need to book profit every time I reach my intended target of Rs. 10 Lakhs. The advantage I feel here is I just pay TDS when booking profit in India and does not have to worry about paying dollars in US when filing tax returns due to DTAA. Though it increases my reported income in US tax filing, it will be within the allowable level.
Like you, I do feel about being debt free and have been all through my 67 years of life (got into planned debt now at 68) but looking at the ROI generated versus interest 7.75% on mortgage payments I feel it will be a good opportunity to stay invested.
The other way of looking at it is, if I completely pay off my mortgage payments say in the next three to five years especially home mortgage then I would have invested $180K in the house in addition to $50K down payment that I had made. My home is presently valued at around $255K. In the future, after me, if my three children on title deed decide to sell the property it may not be very easy as redeeming Equity/ Debt investments. Hence, I feel staying invested long term is a better options as it will generate wealth and simultaneously pay off my mortgage with capital in tact.
Based on the above, please advise if I am heading in the right direction concerning my planned investments in my sunset years. I know experts recommend the debt investing route at my age but I want to think out of the box with proper planning and safeguard.
I have one other query on investing: disposing off real estate property inherited by my daughter after my wife’s demise. She is a US citizen and interested in investing as well and asked me to help her with investment.
Your advice on this will be very much appreciated.
Warm regards
Mohammed Abdul Bari