As I want to shift my FDs to mutual funds which schemes are ideal for me

Even though your thought of diverting fixed deposits to mutual funds is excellent, your expectation of 15 - 18% return from mutual funds is bit high.

Having said the above, if you see the historical returns of diversified equity funds and midcap funds they have been able to deliver the kind of returns you are expecting. But you should remember two things very clearly - one, past performance is not guarantee of future returns and therefore do not set your expectations high. Expecting 12% return is fine, if your investment horizon is 5 years or more. 2) Investment in equity mutual funds, particularly mid & small cap and diversified equity mutual funds, are risky and therefore, you should have a long investment horizon, i.e. minimum 5 years.

Yes, you can draw a fixed amount from your equity mutual fund investments through SWP after 12 months. In this case, the gains made on each instalment will be tax free under long term capital gains taxation (In case of equity mutual funds or equities the classification of long term period is only 12 months).

Now, the question is how much to withdraw every month? We discussed that you can expect 12% return in the long term. But that does not mean that you will start getting that kind of return from the very beginning of your investments. It could be less or more, depending upon how the markets play out after your investments.

Therefore, we suggest that one should not draw more than 8-9% per annum during the initial years. You can start with 9% and see how the returns evolve in next 2-3 years and then increase the monthly SWP amount. Therefore, from an investment of Rs 40 Lakhs, you can initially draw Rs 30,000 through SWP.

You have requested to suggest you 10 equity mutual fund scheme names. Though we are giving the 10 scheme names below but our suggestion would be not to invest in all the 10 schemes but restrict your investments up to 5 schemes only. We believe, few good schemes can do wonders to your portfolio -

Large Cap - SBI Bluechip Fund and Kotak Select Focus Fund

Mid & Small Cap - Canara Robecp Emerging Equities Fund and L&T India Value Fund

Diversified Equity Funds - Birla Sun Life Advantage Fund, SBI Magnum Multi-Cap Fund, DSP BlackRock Opportunities Fund and Mirae Asset India Opportunities Fund

Hope the above helps you in your investment planning.

Thanks for writing to Advisorkhoj.