[carboy]

Originally Posted by ghodlur

My dad has a retirement corpus of 23L which wants to use to cover his monthly expense of 35K.

That's like a 18% return per year. Monthly withdrawal or not, you won't find something even remotely safe for generating that kind of Returns.

[bullrun87]

Originally Posted by ghodlur

MF experts,

A query (actually asked by my father). My dad has a retirement corpus of 23L which wants to use to cover his monthly expense of 35K. Is there a mutual fund which can give good returns with max safety on corpus at the same time as monthly withdrawals.

My suggestion of using a liquid fund and doing a SWP isn't interesting to him. He wants the corpus to maximum period utilization.

Any website where I can show him the comparison of FD vs Mutual fund with the chart of reducing corpus and withdrawals.

The best way to invest for regular income is the Senior Citizen Savings Scheme. Its a sovereign backed instrument that offers 8.6% return and is available for anyone over 60 years. 15 lakh of 23 lakh should go to this scheme. the rest can go to a safe short term bond fund. You can at best derive a monthly income of 12k per month if you get 8 percent returns from your investments. No instrument can provide 18.5% return needed to derive a pension of 35k per month from 23 lakhs.

https://www.paisabazaar.com/saving-s...Interest_Rates

[ghodlur]

Originally Posted by bullrun87

No instrument can provide 18.5% return needed to derive a pension of 35k per month from 23 lakhs.

Thanks for the info. I guess my querry wording was wrong. My dad intends to withdraw 35K every month from his retirement corpus of 23L. How can he earn better returns on the balance amount every month. For eg after he withdraws 35k from 23L, he will be left with 22.65L. How can he earn better returns on this amount and so forth till the retirement corpus becomes zero. A simple FD returns 7.5% pa for senior citizen annually or 0.2% approx on monthly basis. If I use Excel to calculate on reducing balance and interest earned, the corpus amount will last approx 7 yrs. If annual withdrawal (35K X 12 =4.2L) is done then it will last maybe a couple of months more than 7 yrs.

So what I would like to know whether there is any other invement option available other than FD which can return more than 7.5% with ease of liquidity so that my father can prolong the withdrawals to more than 7 yrs. Is there any option available in Mutual Funds. I am wary about the market linked risks.

[bullrun87]

Originally Posted by ghodlur

Thanks for the info. I guess my querry wording was wrong. My dad intends to withdraw 35K every month from his retirement corpus of 23L. How can he earn better returns on the balance amount every month. For eg after he withdraws 35k from 23L, he will be left with 22.65L. How can he earn better returns on this amount and so forth till the retirement corpus becomes zero. A simple FD returns 7.5% pa for senior citizen annually or 0.2% approx on monthly basis. If I use Excel to calculate on reducing balance and interest earned, the corpus amount will last approx 7 yrs. If annual withdrawal (35K X 12 =4.2L) is done then it will last maybe a couple of months more than 7 yrs.

So what I would like to know whether there is any other invement option available other than FD which can return more than 7.5% with ease of liquidity so that my father can prolong the withdrawals to more than 7 yrs. Is there any option available in Mutual Funds. I am wary about the market linked risks.

You could try conservative mutual fund categories like conservative hybrid funds(10-25% equity) and equity savings funds(20-45% equity) . These invest partially in equity, the rest being in arbitrage and debt and hence are more risky than fixed income products. The risk is well contained as they invest only a small fraction in equity.These have a standard deviation of less than 5 whereas your typical equity fund will have standard deviation of over 10. I like icici regular savings, franklin dynamic PE fund of funds and ICICI equity savings fund. Equity savings products also provide the added benefit of equity taxation. These should allow you to get about 8-8.5 percent. you could divide your corpus equally between debt funds/ FD and conservative hybrid products and use STP to withdraw. you should average your entry into the conservative hybrid product over a period of 6 months and start withdrawals after a couple of years. Most people though would advise you to keep it simple with FD's, senior savings instruments and safe debt mutual funds.

[Simhi]

Originally Posted by ghodlur

So what I would like to know whether there is any other invement option available other than FD which can return more than 7.5% with ease of liquidity so that my father can prolong the withdrawals to more than 7 yrs. Is there any option available in Mutual Funds. I am wary about the market linked risks.

I am assuming that your father is not having only this as his source of income and planning for only next 7 years. In which case, you could go for SWP and withdraw around 6% p.a by investing initially the amount in some Ultra Short duration fund (more safety with liquidity option). The return would be less around 12K per month but your capital will not erode assuming the fund returns 8% pa. Also research in the Internet by looking at Three Bucket Strategy and whether it suits you.

[ghodlur]

Originally Posted by bullrun87

You could try conservative mutual fund categories like conservative hybrid funds(10-25% equity) and equity savings funds(20-45% equity)

Originally Posted by Simhi

I am assuming that your father is not having only this as his source of income and planning for only next 7 years. In which case, you could go for SWP and withdraw around 6% p.a by investing initially the amount in some Ultra Short duration fund (more safety with liquidity option). The return would be less around 12K per month but your capital will not erode assuming the fund returns 8% pa. Also research in the Internet by looking at Three Bucket Strategy and whether it suits you.

Thanks guys for the information.

The dilemma of investing in the Mutual funds is the taxation part. Whereas in FD the interest till 50K is exempt for Senior citizens and anything more than that can be negated by submitting 15H form. Even if the investment is in a debt fund, SWP will be considered as redemption and will be taxed as per STCG. LTCG will be applicable for equity investment. This would mean a IT return will need to be filed every year to show the redemption.

[SoumenD]

Have been running a SIP in L&T Emerging business fund(growth option) for around 26 months now and save for the first few months its mostly been a deadly red affair. Currently -12.15%

NAV came down from 27.xx to 21.xx currently. Was continuing hoping to collect as many units as possible to average out but looks like it will take time. So have finally paused my SIPs for this one for a couple of months. I know its advised to continue investing during the lows to average out but my doubt is how long can one keep doing that as its been consistently low since almost 2 years now & keeps going further down?

P.S:One thing I learnt from this experience is, I don't have a high risk appetite. Am better off with my other conservative funds like SBI/ICICI bluchip & HDFC hybrid fund which in similar period are doing Okayish.

[sagarpadaki]

Originally Posted by SoumenD

Have been running a SIP in L&T Emerging business fund(growth option) for around 26 months now and save for the first few months its mostly been a deadly red affair. Currently -12.15%

NAV came down from 27.xx to 21.xx currently. Was continuing hoping to collect as many units as possible to average out but looks like it will take time. So have finally paused my SIPs for this one for a couple of months. I know its advised to continue investing during the lows to average out but my doubt is how long can one keep doing that as its been consistently low since almost 2 years now & keeps going further down?

P.S:One thing I learnt from this experience is, I don't have a high risk appetite. Am better off with my other conservative funds like SBI/ICICI bluchip & HDFC hybrid fund which in similar period are doing Okayish.

That is a small cap fund. The market is bearish now. You will see negative returns in this phase. But , this fund has the potential to grow during the bull run when it happens and give you phenomenal returns. I would suggest you continue investing in it but reduce the amount invested to whatever you are comfortable with.

If you have low risk appetite then you are better off with actively managed hybrid funds like SBI hybrid, Mirae hybrid, ICICI equity and Debt etc

[Jaguar]

Originally Posted by ghodlur

The dilemma of investing in the Mutual funds is the taxation part. Whereas in FD the interest till 50K is exempt for Senior citizens and anything more than that can be negated by submitting 15H form. Even if the investment is in a debt fund, SWP will be considered as redemption and will be taxed as per STCG. LTCG will be applicable for equity investment. This would mean a IT return will need to be filed every year to show the redemption.

You need to file the returns whether you end up paying tax or not. Filing returns should not be the criteria for investing IMO.

[SoumenD]

Originally Posted by sagarpadaki

That is a small cap fund. The market is bearish now. You will see negative returns in this phase. But , this fund has the potential to grow during the bull run when it happens and give you phenomenal returns. I would suggest you continue investing in it but reduce the amount invested to whatever you are comfortable with.

That's a fair advice. Will wait for a couple of months to see where the NAV is headed. Post that will try a reduced SIP to maybe balance out losses.

Originally Posted by sagarpadaki

If you have low risk appetite then you are better off with actively managed hybrid funds like SBI hybrid, Mirae hybrid, ICICI equity and Debt etc

Thanks, i am already invested in HDFC hybrid which is actually holding up well inspite of the market situation. Whatever I reduce from L&T will be added here. Additionally have a couple of blue-chip funds (SBI & ICICI) which are in green. All three around 2-2.5 years old.

[audioholic]

Is there a resource which I can use to track the performance of my MF portfolio V/S Sensex or Nifty index? I am curious to see if the performance gets better over time or we will be stuck at the same stage. For example, today when the sensex is at 38500, my portfolio stands at X percent of profit. Instead of manually tracking this, is there a way I can compare using a tool or some way to fetch this data?

[SmartCat]

Originally Posted by audioholic

Is there a resource which I can use to track the performance of my MF portfolio V/S Sensex or Nifty index? I am curious to see if the performance gets better over time or we will be stuck at the same stage. For example, today when the sensex is at 38500, my portfolio stands at X percent of profit. Instead of manually tracking this, is there a way I can compare using a tool or some way to fetch this data?

Valueresearchonline calculates XIRR of your mutual fund portfolio, even if you are doing SIPs. Just compare the returns with that of index.

[audioholic]

Originally Posted by SmartCat

Valueresearchonline calculates XIRR of your mutual fund portfolio, even if you are doing SIPs. Just compare the returns with that of index.

I am using Value research to maintain my portfolio. However, the issue with VR is that it never shows us the absolute profit or loss percentage but like you say provides the XIRR. Right now, the XIRR shown in my portfolio is higher than the actual returns I have got. Hence, it is in a way giving a wrong picture of the status of the portfolio. Second, it does not show a graphical representation of how the portfolio has changed over time. Hence, it is not possible for me to directly compare it with any index. Seeing all these, I was interested in a platform which can track my investment value over time and directly compare it with an index. I am keen on this because, over time I would want my portfolio to develop a positive offset over time in comparison with an index.

Lets say when sensex was at 37000 points sometime earlier, my portfolio value had dropped to cost price. Now it is at profit. In the future, I would expect that when sensex might drop down to 37k again, my portfolio should still be in profit, and the break even level would have dropped to maybe 36500 points. This will give the confidence that the state of the investments are indeed improving over time. Since I am a new investor, I am unsure of how funds appreciate over time. Hence I want to put this effort to understand how the overall health of my portfolio is becoming over time.

[dmplog]

Problem with any portfolio tool (be it VR or any other) is that you have to accurately enter all transactions manually. This includes all lump sum, SIP, redemptions, transfers, etc.
I used to manage this earlier but off late I have ran out of patience. So how do I track my investments? I refer to NSDL CAS Statement that I receive every month. Ok, it's not ideal but it shows me for each find what's my gain on an annualized basis.
I think MorningStar also has portfolio tool. Have you explored that to see if it satisfies your requirement. It's another portal I have started referring to fire find ratings

[SmartCat]

Originally Posted by audioholic

This will give the confidence that the state of the investments are indeed improving over time. Since I am a new investor, I am unsure of how funds appreciate over time. Hence I want to put this effort to understand how the overall health of my portfolio is becoming over time.

This fixation on Sensex or Nifty is not right. In bearish markets, these two indices comfortably outperform most mutual funds. In bull markets, most mutual fund portfolios leave the indices in the dust. Basically, if your mutual fund portfolio has been lagging the index for a time period of, say 6 months or 1 year, it means absolutely nothing.

Just stick to traditional parameters used to build a mutual fund portfolio:

- Diversification across fund houses
- Diversification across investing styles (by marketcap, by country, multicap fund, index fund, value/discovery fund, dividend yield fund etc)
- Diversification across equity, liquid and govt bond funds.

Perhaps you could allocate a large percentage of your portfolio to index funds, so that your underperformance with respect to Nifty/Sensex will not be significant in bear markets.