Dear Srikanth,
I am aged 56 years recently opted VRS. I have recently invested 25% of my retiral corpus amounting to Rs.10.00 lakhs in HDFC balanced fund growth and ICICI prudential Balanced fund growth - 5.00 lakhs each with an objective to withdraw Rs 3000/- from each fund monthly under SWP.
My family has total insurance coverage of Rs.20.00 lakhs . Rest of my funds I have kept in Bank FD s with monthly interest withdrawal. My monthly pension is RS.31000/-. I made these investments in JULY 2017. till yesterday both funds were performing well with an unrealised profit around Rs 5000 each. But today i.e. on 10.08.2017 as the market has come down HDFC fund has gone into negative and ICICI is a little positive. I want your suggestion whether to continue in these funds by monthly SWP of Rs.3000/- each. my investment period is 5 years.
Can I expect my principal to appreciate/be intact after 5 years after SWP of Rs.3000/- every month. If not my idea is to switch to liquid funds to keep my principal safe.
Please suggest the recourse available to me with tax implications if I switch to liquid funds.
Thank You
Regards
vinaync
e mail : vinaynalla**@gmail.com
6 Answers
Dear Vinay ji,
SWP is a tax efficient and good investment strategy, to get fixed and periodic income.
However, kindly note that equity oriented balanced funds have moderate risk profile. The capital appreciation is not guaranteed, returns are not guaranteed and can be volatile...
If your investment objectives are safety of capital + SWP then you may consider Debt funds or Arbitrage funds.
(Kindly do note that even debt funds can be associated with certain types of risks, but comparatively they are not as risky as equity oriented funds..)
You may kindly go through below articles :
https://www.relakhs.com/lump-sum-investment-options-retirees/
https://www.relakhs.com/debt-funds-types-benefits-risk-vs-return/
https://www.relakhs.com/best-arbitrage-funds-returns/
https://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/
https://www.relakhs.com/best-balanced-mutual-fund-schemes-review/
Dear Sreekanth
Thank you for your reply and update on investments. The two funds that I have invested are right now showing downward trend due to market volatility. Both funds are in negative and eroded my principal by Rs.5000/-. Is it right now for me to switch to debt liquid funds or to wait for sometime to get my funds back into positive.
Your advise in this aspect will help me a lot in my furhter decision
Thank You and regards
vinaync
Hi Sir,
Let's not try timing the markets!
If you have chosen wrong investment products, suggest you to come out of them immediately.
Kindly be aware of Exit load and tax implications.
Suggest you to also go through the article (shared) on different types of Debt funds. Liquid funds have very low risk but may give your very nominal returns.
Kindly read :
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
Dear Sreekanth
If I stay invested without SWP for a period of 3 years in these funds will it be a right strategy.
Sir,
You may remain invested in balanced funds if your investment objective is accumulation of corpus (no withdrawals), time-frame of around 5 years or so and can afford to accept the risks/volatility.
Kindly note that both the funds are consistent performers under 'balanced fund - equity' category.
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