I have Rs 30 lakh in hand and need to generate a stable monthly income of Rs 30,000-Rs 35,000 for the next 5-6 years to support a family of five.
We own our home, have no loans, and live frugally – basic food, utilities, and occasional medical costs. One child’s college is covered by scholarship; the other is doing low-cost open learning. We’re not interested in stocks or risky ventures – safety and consistency are key. What’s the best way to split this ₹30L to achieve the income goal without depleting the entire corpus? Prefer low-risk, tax-efficient options like SWP, SCSS, or FDs.
Advice by Akhil Rathi, Head – Financial Advisory at 1 Finance
A practical structure for your Rs 30 lakh would be to allocate around Rs 20-22 lakh to dynamic bond funds and set up a Systematic Withdrawal Plan (SWP). These funds typically yield around 7% to 7.5% annually post-tax, generating approximately Rs 15,000 per month in returns. While this alone won’t meet your income target, you can still withdraw Rs 20,000-Rs 25,000/month by partly drawing from the principal, ensuring a steady flow for 5-6 years with minimal risk and potential tax efficiency.
The remaining Rs 8-10 lakh can go into bank fixed deposits with monthly interest payout, offering 5%-6% post-tax. This adds another Rs 5,000-Rs 6,000 per month. Together with the SWP from bond funds, your total monthly income can comfortably reach ₹30,000-₹32,000 over the next 5-6 years, without immediate capital depletion.
Over this period, you will withdraw between Rs 21.6-Rs 25.2 lakh. Your principal is expected to remain largely intact, leaving a buffer of Rs 5-8 lakh by the end of 6 years. This ensures you have funds available for future needs or emergencies, even as inflation-likely to average around 5% to 6%-gradually erodes purchasing power.
If you’re open to some level of risk, consider allocating Rs 2-3 lakh to index equity funds, such as Nifty 50 or Sensex ETFs. Since your investment horizon is 5-6 years, even limited equity exposure can potentially boost long-term returns and help beat inflation. Keep this portion untouched during the income phase and review annually along with your broader allocation.
Investment options suggested:
Dynamic Bond Funds with SWP (Systematic Withdrawal Plan)
Allocation: Rs 20-22 lakh
Expected Post-Tax Yield: 7%-7.5% annually
Purpose: Primary income source through monthly withdrawals
Tax Efficiency: Gains taxed as long-term capital gains if held >3 years
Bank Fixed Deposits (FDs) with Monthly Interest Payout
Allocation: Rs 8-10 lakh
Expected Post-Tax Yield: 5%-6% annually
Purpose: Supplement monthly income with stability
Liquidity: High, low risk
Optional – Index Equity Funds (Nifty 50 / Sensex ETFs)
Allocation: Rs 2-3 lakh (if comfortable with some risk)
Purpose: Long-term inflation hedge
Note: To be left untouched during income phase and reviewed annually
These options are geared toward capital preservation, monthly cash flow, and low-to-moderate risk, aligning well to generate Rs 30,000-Rs 35,000 per month for 5-6 years without significantly depleting the corpus.