I have assets worth Rs 1 crore and 50k monthly expense, can I leave my job now?

I’m 35, married, and expecting a child. I invest Rs 70,000 monthly in equity mutual funds and have assets worth Rs 1 crore. I plan to quit my job next year and stop SIPs. I’ll need Rs 50,000 monthly from my investments for my expenses over 20 years. How can I achieve this?

Let us assume that the market grows at a tepid 8% in the next year. You will be left with about Rs 1.17 crore when you stop working. Of this amount, if you wish to create a stable income from a safe source, you can invest about Rs 80 lakh in RBI Floating Rate bonds, which currently offer an 8.05% return, with quarterly payouts, and can be renewed. Even if the interest rate falls a little, you can move some corpus from the remaining Rs 37 lakh to make up for your income. You can continue to hold the remaining corpus in equity MFs and allow it to grow. Do keep in mind that you have not considered inflation in your monthly requirement. If so, you may need to start withdrawing from your mutual fund holdings

Vidya Bala, Co-founder, PrimeInvestor.in

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I am 46 years old, with 24 years of work experience, and recently quit my job. I need a monthly income of Rs 70,000 to cover my expenses. Could you advise on the corpus required to generate this income through systematic withdrawal plans (SWPs), and how I should allocate the funds to meet this goal?

If you want this income for, say, the next one year (assuming you get back to work by then) without disturbing your corpus, you would need roughly around Rs 1.2 crore to generate Rs 8.4 lakh of income per year (Rs 70,000 per month). We have not considered inflation here and assumed a return of 7% from debt funds or deposits. If you simply plan to withdraw funds, then you can just park Rs 9 lakh and keep withdrawing the amount monthly for about a year. Or, if your intention is not to work anymore, then assuming an inflation of 4.5%, a return of 7.5% on the corpus, and a lifespan of 80 years, you need around Rs 1.8 crore to generate income with annual inflation. For either of these objectives, you may use a combination of short-duration funds and equity savings funds to generate the required cash flow through SWP

Vidya Bala, Co-Founder, PrimeInvestor.in

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