Monthly Income From One-time Investment: How one-time investment of Rs 17,00,000 can provide monthly income of Rs 2,97,000 for 30 years

One can start a periodic or a one-time investment to create a retirement corpus. It should be goal-oriented, and one should give ample time for their investments to grow.

One may pick a market-linked investment option, such as stocks or mutual funds, or a non-linked option, such as a fixed deposit, recurring deposit, gold bonds, sovereign or corporate bonds, to create a retirement corpus.

If your investments are market-linked, a long duration can help your investment fight market fluctuations and maintain steady growth in the long term. It also gives a long time for a good level of compound growth of your investments.

If you have a Rs 7 lakh amount which you want to invest in a mutual fund scheme from where you are expecting an annualised return of 12 per cent, see how large a corpus it can create in 25, 30, and 35 years.

In 25 years, estimated capital gains will be Rs 1,12,00,045, while the estimated corpus will be Rs 1,19,00,045. In 30 years, estimated capital gains will be Rs 2,02,71,945, while the estimated corpus will be Rs 2,09,71,945.

We will calculate how an Rs 17,00,000 one-time investment can generate an estimated corpus of nearly Rs 5.10 crore in 30 years. In the next phase, we will calculate how the post-tax corpus may help you generate an estimated monthly income of around Rs 2,96,200 for 30 years.

In 35 years, estimated capital gains will be Rs 3,62,59,734, while the estimated corpus will be Rs 3,69,59,734.

SWP is a way to withdraw an amount from a mutual fund scheme in phases. If someone has a retirement corpus which they don't want to withdraw in one go, they can withdraw it for years through SWP. While it will help fight market fluctuations, it will also help get growth on the investment.

We will calculate how a Rs 17,00,000 mutual fund lump sum investment can generate an estimated corpus of Rs 5.10 crore in 30 years. In the next phase, we will calculate how the post-tax corpus may help generate an estimated monthly income of around Rs 2,96,200 for 30 years.

In 30 years, estimated capital gains from this investment will be Rs 4,92,31,868, while the estimated corpus will be Rs 5,09,31,868.

On this retirement corpus, long term capital gains (LTCG) tax will apply, where the investor will have a Rs 1,25,000 tax exemption. On the rest of the corpus, the LTCG tax will be applied at a 12.5 per cent rate. After an exemption of Rs 1,25,000, taxable LTCG will be Rs 4,91,06,868.

At a 12.5 per cent rate, the estimated income tax on this corpus will be Rs 61,38,358.5. Post-tax estimated corpus will be Rs 4,47,93,509.5.

Rs 4,47,93,509.5 will be the estimated SWP investment amount, which will be used to withdraw a monthly income. We will invest this amount in a hybrid or a debt mutual fund where the estimated return will be 7 per cent. We are investing this amount in a conservative fund because we want to take a minimum risk for the retirement corpus meant for retirement.

The estimated monthly income that can be drawn from this corpus for 30 years is Rs 2,96,200.

Since the investor is also getting 7 per cent annualised growth on this investment, the estimated total amount withdrawn will be Rs 10,03,89,960, and the balance will be Rs 1,03,091.