I am planning to invest in debt funds so that every month I can get Rs 10,000 for my expenses through Systematic Withdrawal Plan(SWP). Can you please suggest best debt funds for me.
-Venkatarao Dadi

It is not possible to offer a personalised advice to you since you have not included any personal or financial details in your message. If you are a retired person, you should proceed extremely carefully with your corpus. Wrong investment decisions come at a cost – it is not easy to undo their damage entirely. You also have to pay loads, taxes, etc. So, tread carefully.

Do you have a regular pension to take care of your primary living expenses? If yes, you can invest the money in debt mutual funds to supplement your income. That is, only if you need extra income. If you do not need the extra income, you can consider to invest the money as per your financial goals and risk profile.

If you are investing to generate extra income, ideally you should choose debt schemes with least volatility and risk. This is to ensure that your corpus doesn’t go up and down and you can withdraw a fixed amount regularly through an SWP. Most mutual fund advisors believe that liquid schemes and ultra short duration schemes are ideal to set up an SWP. However, some investors have also started using arbitrage funds to set up an SWP due to the long term capital gains tax of 10% after one year.

If you do not want to touch your capital, you should set up the SWP carefully. You should withdraw less than the expected return to ensure that your capital remain intact. For example, if the scheme is likely to offer you 7% returns annually, you should withdraw only 6% annually.

What if you do not have a pension and looking to generate regular income to take care of your primary living expenses? In that case, you should opt for government-sponsored schemes like Senior Citizen Saving Scheme and Post Office Monthly Income Scheme that offer guaranteed returns. You can use debt schemes to supplement your income.

Consult a financial planner or mutual fund advisor before proceeding. Take the final decision only after considering your financial condition and requirements carefully.

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