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I have a lump sum of Rs 20 lakh which I want to invest in mutual funds. And after two years, I would like to start a Systematic Withdrawal Plan (SWP) of Rs 20,000 per quarter. Of large-, mid-, small- and multi-cap funds, which one should I choose?
- Bhaskar
Withdrawing Rs 20,000 per quarter, i.e. Rs 80,000 a year, and that, too, after two years is not a very aggressive expectation. I feel that you should invest something like Rs 80,000 in debt funds. And spread the remaining Rs 19, 20,000 in an aggressive hybrid fund over the next two years so that all your money gets invested. This means you should divide Rs 19,20,000 by 24 and start an SIP.
The first Rs 80,000, which you would retain in the debt fund, should be used in the first year after two years, that is, in the third year. Thereafter, I think, you should do a systematic withdrawal plan of Rs 20,000 a quarter.
I think you will also have the luxury of revising this Rs 20,000 to a higher amount because by then, the money is likely to be accumulated well. So, about 4 per cent of the increased amount can be withdrawn then through an SWP. It is a simple plan to implement.
