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How much to invest to get Rs. 10,000 per month

January 14th, 2007

Well, here is a question that many financial advisers and tax planners get asked by novice investors: How much money should i have to invest in order to get Rs. 10,000 per month?
This sounds to be a reasonable question. Rs. 10,000 is a decent income for novice users who do not want to track stocks on a daily basis and yet get want to put in a lump sum money as an investment and forget about it for some time yet make Rs. 10,000 per month by way of income from the investment.

Many financial experts whom this question was asked says that an investment of Rs. 10 Lakh in a proper blend of mutual funds would give in the said amount. They say that novice users should not have a direct presence in the stock market because of the ups and downs that happen on a daily basis. Added researching sectors, picking stocks, taking positions and having a clear exit policy at the right time is almost very difficult for novice. Hence, the job be given to fund managers who take up the responsibility of making your money work harder in a professional way.

As said, even putting money into the mutual funds too needs to be carefully planned - particularly when you are expecting monthly returns consistently (by way of dividends). About 30% of the money could go to diversified equity funds, 60% to MIPs and the remaining 10% for debt funds (particularly those that do not have entry and exit loads and are highly liquid). The MIPs are the real money givers for you in a consistent basis. In case the MIPs are not able to give in the targeted money, you can tap the investment in debt fund to draw the money that fell less to the targeted Rs. 10,000 per month. Since equity funds are expected to give in good returns on a long term basis, you can opt to take dividends from the equity funds and increase your stake in the MIPs as and when dividends on Equity funds is announced.

As for funds, they say that fund houses that are well known for giving good dividends consistently are to be picked. HDFC, Birla, Reliance, DSP, FT top their charts.

Entry Filed under: Mutual Funds