How To Invest 15 Lakhs For Monthly Income

2. Systematic Withdrawal Plan (SWP)

Under SWP, you invest a lump-sum amount in a mutual fund. Later on, you can withdraw the fixed amount regularly. This ensures a consistent revenue flow and offers flexibility. The expected rate of return from SWP investments can be anywhere between 8-10%. 

Risk: Market-linked

Returns: Variable

Tax: Withdrawals are subjected to capital gains tax. For equity mutual funds, short-term capital gains are taxed at 15% and long-term gains over 12 months at 10% if gains exceed 10%.

Advantages: Offers regular income, suits retirement plans, and provides long-term capital appreciation.

Disadvantages: Subject to market volatility and performance of the underlying assets.

Popular SWP Mutual Funds in 2023:

• HDFC Retirement Savings Fund Equity Plan Direct-Growth
• ICICI Pru Equity & Debt Growth Plan
• Quant Absolute Fund Growth Plan

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3. P2P Lending

P2P lending platform connects lenders and borrowers directly, cutting out banks as intermediaries.

But how does it work?

On a P2P platform, borrowers and lenders sign up. Borrowers’ trustworthiness is checked using different factors. Lenders pick who to lend money to based on their own risk and what they want to gain.

P2P platforms have fees set by the RBI, but they don’t keep hold of the money from lenders or borrowers.

Have a look at this table below and get an understanding of LenDenClub a P2P lending platform works, and discover how you can potentially earn returns of up to 10%

Risk: Moderate

Returns: Varies

Tax: Interest income is taxable

Advantages:

• Diversify your portfolio with potentially higher returns.
• Accessibility to a growing alternative investment market.

Disadvantages:

• Limited regulations and platform-dependent risks

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4. Mutual Funds (Debt Funds)

Mutual funds are investment vehicles that pool money from investors to create a diverse portfolio. They potentially generate higher returns than fixed deposits but are not risk-free. Mutual Funds offer higher returns than the interest on SWPs and FDS. The returns vary from provider to provider and depend on how the underlying investments perform. 

Risk: Moderate

Returns: Varies (potentially higher returns than FD)

Tax: tax efficient, Indexation Benefit

Advantages: Diversification, professional management

Disadvantages: Market-linked risks

Here are some of the best-performing funds in 2023:

5. Real Estate

Real estate yields higher returns through property appreciation and rental but generally involves high risks.

Nationwide, the average house price was INR 7,100 per square meter in Q2 2023, marking a 6% increase from the previous year.

In Mumbai, one of the most expensive housing markets in India, the average house price reached INR 10,200 per square meter in Q2 2023, a 3% increase from the previous year. This rise in prices reflects a growing market with potential for capital appreciation.

Risk: Moderate to high

Returns: high returns (property appreciation + rental income)

Tax: rental income is taxable; tax on property sale

Advantages: Capital appreciation potential, tangible asset

Disadvantages: High transaction cost, illiquidity

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6. Dividend Stocks

Acquiring dividend stocks offers capital appreciation and regular income through dividends. But at the same time, they are vulnerable to market volatility and company-specific risks.

The dividend yield for stocks in India varies significantly. Some of the notable dividend yields as of September 2023 are:

• Taparia Tools Ltd.: 1111.11%
• TV Today Network Ltd.: 33.11%
• Vedanta Ltd.: 29.22%
• Hindustan Zinc Ltd.: 19.31%
• Coal India Ltd.: 8.60%

Risk: Market-linked

Returns: Variable (dividends + capital appreciation)

Tax: Dividend income taxed; tax on capital gains on stock sales

Advantages: Capital appreciation potential, regular income

Disadvantages: Market risks, company-specific risks

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Benefits

Investing in multiple assets in the long term has its advantages. While equities and stocks come with higher risk-higher return ratios, debt, FDs, and MFs give moderate to high returns at limited risks. 

• Diversification:  When you invest in different asset classes, the risk is spread across the assets. Asset diversification leads to a reduction in associated risks of the overall portfolio. 
• Regular Income: By investing in low-risk possible options like mutual funds with SWP, dividend stocks, and mutual funds.
• Capital Appreciation: Investment options like real estate and dividend stocks offer the possibility for capital appreciation.
• Tax Efficiency: You can maximise your returns by choosing tax-efficient investment options.  

Factors to Consider

Before making any investment, one should take the following factors into account: 

• Risk Tolerance: While making investment options, consider your appetite for risk tolerance.
• Time Horizon: Consider your investment horizon for investment options related to the market.
• Tax Implications: Understand how each investment option may affect your taxes.
• Market Conditions: Monitor the market conditions regularly and adjust as required in your portfolio.
• Diversification: By diversifying your investments, you can reduce risks and increase the chances of potential returns.

Conclusion

A simple answer to how to invest 15 lakhs for monthly income is the need for a well-rounded strategy. The strategy should incorporate various investment options for risk mitigation and potential returns.

Your investment strategy should be in line with current market conditions, your financial objective, and your risk appetite. By analysing different investment options and making well-informed decisions, you can generate a healthy income stream with your 15 lakh investment.