This is the right way to invest, you can earn Rs. 1 lakh per month

Personal Finance: Everyone wants to get good returns on their investments. However, due to blind imitation and incorrect study, the returns on investment may be far off and may even lead to loss of capital. Hence, one should always invest based on adequate study and advice from a trusted financial advisor. A retired businessman has a corpus of Rs. 1 crore, but wants to invest this Rs. 1 lakh after retirement with the intention of earning income. He has a moderate risk appetite.

To earn Rs. 1 lakh per month, a return of 12% per annum is necessary. All safe investment instruments are giving a maximum return of 8%. However, a stable income guarantee is also necessary as the investment is made after retirement. In which inflation, tax etc. should also be taken care of.

This method can be adopted

If the risk appetite is moderate, one can opt for Systematic Withdrawal Plan (SWP) by investing in two hybrid funds. Balanced Advantage and Multi Asset Funds usually provide an average return of 10-12 per cent as they invest in a mix of equity, debt and gold. In SWP, one can withdraw a fixed amount every month from a lump sum investment in any fund scheme. In which a part is withdrawn every month from your total investment. However, it also offers the benefit of interest rate on the invested amount.

Benefits of Systematic Withdrawal Plan

SWP has the benefits of lower tax liability on principal withdrawal, more favourable taxation compared to fixed income products and the ability to earn positive returns every month on equity investments.

Income up to 15 years on investment of Rs 1 crore

If you withdraw Rs. 1 lakh, a fund of Rs. 1 crore with 10 percent return can last for 15 years, but if you increase the withdrawals over time keeping in mind the 6 percent inflation rate, the fund will generate income for nine years. If you want to get a fixed income every month for 15-18 years, then the monthly withdrawal of Rs. 1 lakh can be reduced to Rs. 60000-70000. It is also important to prioritize health insurance and emergency fund.