Stepping into the world of investments with ₹20 Lakh is like starting with a rich, fertile plot of land. The dream? Harvesting a monthly crop worth ₹50,000. But the question is, which seeds will get you there? Let’s embark on this investment journey and see how the Indian landscape can help us achieve this.
1. Fixed Deposits – The Paddy Fields: Much like the consistent yield of a paddy field, Fixed Deposits (FDs) are traditionally stable. At current rates, an FD might fetch you around 5-6% annually. On a ₹20 Lakh corpus, this translates to about ₹1 Lakh per annum, or ₹8,333 monthly – falling short of our ₹50,000 target.
2. Debt Mutual Funds – The Vegetable Gardens: With a bit more risk than FDs, debt funds can offer slightly better post-tax returns. Expect around 6-8% annually. But even at 8%, we’re only looking at ₹1,33,333 per annum or about ₹11,111 monthly.
3. Equity Mutual Funds – The Orchards: These can be the cherry trees of our plot, having the potential to offer returns of 12-15% or more in a thriving economy like India. That’s up to ₹3 Lakh annually or ₹25,000 monthly. While promising, remember the returns are also subject to market risks.
4. Dividend-yielding Stocks – The Dairy Farms: Some stocks, like the cows in a dairy farm, provide regular dividends. While capital appreciation is one part, dividends from blue-chip companies can add to the passive income.
5. LSG Framework: Given the desired monthly income and available corpus, a blend might work best. Liquid assets for immediate needs, Safety to preserve the capital, and Growth assets to generate returns. Using the Liquidity-Safety-Growth (LSG) framework, judiciously allocate between FDs, debt funds, and equity.
Warren Buffet once said, “If you don’t find a way to make money while you sleep, you will work until you die.” This rings especially true for passive income.
To sum up, generating ₹50,000 monthly from ₹20 Lakh isn’t immediate or straightforward. The key lies in balancing risk and return, and periodic reviews. A SEBI Registered Investment advisor can help tailor this balance. If you’re searching for guidance, consider reaching out to Jama Wealth’s investment advisory services.
