Getting on a journey to generate regular income from a deposit of Rs 1 crore is like sailing on the tranquil financial waters, but it’s important to be aware of the lurking storms of inflation and tax inefficiencies.
1. Interest Earnings:
If we explore traditional avenues like Fixed Deposits, the average interest rates hover around 5%-6% per annum. So, with Rs 1 crore, you can roughly anticipate a monthly interest between Rs 42,000 and Rs 50,000 before tax. But herein lies the caveat, the return is not only marginal but also eroded significantly post-taxation.
2. Impact of Inflation & Tax:
The continuous whirlwind of inflation can degrade the purchasing power of your returns. Additionally, the interest earned is taxed as per your tax slab, making this avenue less lucrative and diminishing the real value of your savings over time.
3. Need for Equity Exposure:
To counter these challenges, a splash of equity exposure can be the antidote, shielding your wealth against inflation and offering potentially higher returns. However, diving into equities requires a cautious approach, aligning with one’s risk tolerance and financial goals.
4. Risk Profile Analysis:
Before veering towards equity, a meticulous risk profile analysis by a SEBI Registered Investment advisor is paramount. It helps in carving out an optimal investment strategy, ensuring your financial ship sails smoothly amidst the market’s ebbs and flows.
Practical Usage:
Diversify your investment basket with a mix of debt and equities after understanding your risk tolerance and investment goals. An informed and balanced approach can be the beacon, guiding you through the financial fog towards lucrative shores.
To sum up, while bank deposits offer safety and regular income, the net value is often corroded by inflation and taxes. A balanced portfolio, possibly with some equity exposure after comprehensive risk analysis, can be more beneficial. If meticulous guidance is what you seek, consider Jama Wealth’s SEBI Registered Investment advisory services.
