How to get the desired SWP amount from lump sum investment in balanced fund

I was surprised to see the reply mail for my query. Thanks a lot guys. I wish you guys all the best for successful in business. Actually, this investment advise is for one of the customer. His son-in-law (Aged 35 years) was working in reputed Software company and passed-away on October 2016. His family received an insurance amount and Company's final settlement of around 50L. He was surviving with Wife and 2 kids(8 and 2 years old). He was the only bread earner in his family. My customer asked a favour of some good returns deposit/investment. Following are the suggestion given - 1. 4.5L in post office (MIS) scheme which is earning 7.7%, 2. Sukanya Samridhi Scheme for his grand-daughter for an amount of 50K per annum, 3. SIP DSP Black Rock micro cap fund for monthly Rs. 5000, 4. I suggested him to go for 25L in monthly dividend scheme and invest in 5 funds, He wants Rs. 45000/month in deposit and investments. So, I need some suggestions on 4th point and any other suggestions are highly welcomed. Bifurcating to 4 or 5 different buckets with Min to Max risk funds in Monthly dividend funds. Any input from your side is highly appreciable and helpful to his family?

Mar 31, 2017 by Chandra Mohan S, | Mutual Fund

I think we missed out this communication from you and thus the delayed reply. We do not know if you still need the desired information?

Nevertheless, we are trying to answer your query –

1. Point 1 and 2 is fine

2. Point 3 – you cannot invest is DSPBR Micro Cap SIP as the scheme is neither accepting lump sum nor SIPs. Selecting Mirae Asset Emerging Bluechip for monthly SIP could be a good idea.

3. Point 4 – Balanced Funds paying monthly dividends could be a good idea and we shared the following list with you earlier -

ICICI Prudential Balanced Fund https://www.advisorkhoj.com/mutual-funds...

DSP BlackRock Balanced Fund https://www.advisorkhoj.com/mutual-funds...

Canara Robeco Balanced Fund https://www.advisorkhoj.com/mutual-funds-research/mutual-funds...

SBI Balanced Fund https://www.advisorkhoj.com/mutual-funds...

TATA Balanced Fund https://www.advisorkhoj.com/mutual-funds...

HDFC Balanced Fund https://www.advisorkhoj.com/mutual-funds...

4. However, their requirement of 45,000 per month cannot be fulfilled as the lump sum corpus for investment in balanced fund is only Rs 25 Lakhs. If we add the monthly interest received from PO MIS scheme, still it will not be sufficient. Therefore, you may need to change the strategy a bit. Is investing Rs 50,000 a month in Sukanya Samdriddhi Scheme a wise decision? If you invest in balanced funds the returns will be much more in the longer run, albeit there is no guarantee.

The idea should be to achieve the short term goal first, i.e. earning Rs 45,000 per month. And if that can be achieved by getting regular dividends or SWP by investing in balanced funds then the long term goal of the child can also be achieved as you can expect good capital appreciation from balanced fund even after receiving the dividends/ or withdrawals through SWP.

You can check the dividend yields of balanced funds from here https://www.advisorkhoj.com/mutual-funds... in order to figure out how much to invest in lump sum to get the desired monthly dividends or may try the SWP route and withdraw a fixed amount per month by investing in balanced funds.

Hope the above helps.

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