7 hours ago
1
Power of Rs 1 Cr Corpus: An Rs 1 crore corpus mark can be quite an achievement for the majority of investors in India. If anyone has that amount, they may have a fair chance to generate passive income for many years or decades. One can build an Rs 1 crore corpus by investing a lump sum amount or investing periodically.
Or, if they already have that amount, they can invest it right away in a number of market-linked or non-market-linked investment options such as fixed deposit, mutual fund systematic withdrawal plan (SWP), or annuity plan.
But if you invest that amount today, how much monthly income may you get in State Bank of India's 10-year FD, a mutual fund systematic withdrawal plan (SWP), and Life Insurance Corporation's (LIC) immediate annuity plan?
See our calculations to know-
Different modes of lump sum investments
One can invest a lump sum amount in market-linked instruments such as mutual funds, ULIPs, stocks, National Pension System (NPS), or non-market-linked investments such as fixed deposits, fixed interest annuity plans, Public Provident Fund (PPF), etc.
Investment conditions in most of them may differ, but all of them can generate passive income in the long run.
Calculations for story
We will take the example of SBI 10-year FD, mutual fund SWP, and Life Insurance Corporation (LIC) Jeevan Akshay-VII immediate annuity plan.
FD calculations
We are taking the example of State Bank of India's 10-year FD, which is providing a 6.05 per cent interest rate.
We are giving the amount you may draw if you opt for the monthly, quarterly, half-yearly, or maturity withdrawal option.
If you opt for monthly withdrawal, the total estimated interest in 10 years will be Rs 60,49,999, which will be equal to Rs 50,417 a month.
The estimated amount will be the same if you pick the quarterly or half-yearly payout option.
If you withdraw the amount on maturity, the estimated interest will be Rs 82,29,759, and the estimated maturity will be Rs 1,82,29,758.
Mutual fund SWP
One may also invest a lump sum amount in a mutual fund and start a systematic withdrawal plan (SWP) to get a monthly payout.
The fund house provides growth and principal, both in the form of monthly withdrawal.
We are taking the examples of 3 SWP plans from which you get 6 per cent, 7 per cent, and 8 per cent annualised returns, respectively, and draw a monthly income for 20 years.
At a 6 per cent annualised return, the estimated monthly income that one may draw for 20 years will be Rs 71,285.
If the annualised return rate is 7 per cent, the estimated monthly income for 20 years will be Rs 77,080.
At an 8 per cent annualised return, the estimated monthly income for 20 years will be Rs 83,090.
LIC Jeevan Akshay-VII plan
LIC Jeevan Akshay-VII is an immediate annuity plan that has as many as 10 annuity payout options.
We are giving the estimates for a person who is entering into the policy at 60 years of age (55 years for joint life annuity), and picks the annuity mode as the yearly age of the secondary.
Here's what they may get in different options after investing Rs 1 crore (as per the LIC scheme brochure).
- Option A: Immediate annuity for life: Rs 9,06,500
- Option B: Immediate annuity with guaranteed period of 5 years and life thereafter: Rs 9,00,500
- Option C: Immediate annuity with guaranteed period of 10 years and life thereafter: Rs 8,81,500
- Option D: Immediate annuity with guaranteed period of 15 years and life thereafter: Rs 8,53,500
- Option E: Immediate annuity with guaranteed period of 20 years and life thereafter: Rs 8,19,500
- Option F: Immediate annuity for life with return of purchase price: Rs 6,56,500
- Option G: Immediate annuity for life increasing at a simple rate of 3% p.a.: Rs 7,32,500
- Option H: Joint life immediate annuity for life with a provision for 50% of the annuity to the secondary annuitant on death of the primary annuitant: Rs 8,33,500
- Option I: Joint life immediate annuity for life with a provision for 100% of the annuity payable as long as one of the annuitant survives: Rs 7,71,500
- Option J: Joint life immediate annuity for life with a provision for 100% of the annuity payable as long as one of the annuitant survives and return of Purchase Price on death of the last survivor: Rs 6,50,500
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
English (US) ·