Kindly suggest me a plan where should I invest a lump sum of ₹10 lakhs to get a regular income of ₹20k and above.Asked
Yes, it is possible to generate this amount from investments in mutual funds. However, the returns depend on the time period for which your money remains invested.
If we calculate your expected returns it is 24% yearly and many mutual funds have provided returns up to this extent but it is accompanied by higher risk.
If you are planning to invest lump sum amount for 5 years and the same time ready to take the risk, we would suggest you to invest in mid cap equity mutual funds. Equity mutual fund scheme can be considered the appropriate mutual fund scheme to invest lump sum amount in India. These funds have the potential to give higher returns if invested over a longer period of time.
Mid- Cap funds: Here, the mutual fund invests in stocks of mid-size companies. These funds provide moderate risk to investors. These funds can be considered if the investment period is greater than 5 years.
Small Cap funds: In these types of funds, fund manager invests the major portion of the investors' money in stocks of companies having low market capitalization. These funds can be considered if the investment period is greater than 6 years.
Multi-Cap funds: These funds are used to minimize the risk and diversify the investment. In these funds, capital is invested in companies across different sectors.
Depending on the risk appetite and time period, an investor can choose among these equity mutual fund schemes. However, risk and return go hand in hand with most of the financial instruments.
Another way to invest lump sum amount is through STP (Systematic Transfer Plan). For investing a lump sum amount, you always want to invest at the lowest price. But knowing the current price is high or low is challenging. STP is an automated way of transferring money from one mutual fund to another. You can transfer the money from the debt funds to equity funds through STP.