MIP for steady monthly Income?

[life2007]

Hi Friends

Is it advisable to invest 5K or lumpsum (if i receive sudden surplus) each month SIP to MIP (Reliance MIP or HDFC Long Term MIP) and hold it for one year and then do STW (Systematic Withdrawal) for steady fix income each month?

This is what I thought the best way after reading some financial articles. I know the LTCG would be better so withdrawing after 1 year would make sense.

I have a disorganized fluctuating income and many times there could be rainy days which could last for many months even a year. I have passed through this phase so I know how horrible it is. So when the sun shines can I adopt this strategy? By this way, I don't have to worry for fix monthly income if i put a decent amount in MIPs.

Please criticize my thoughts if you feel so. I thought instead of FDs, this would be best way and my picks are Reliance MIP and HDFC Long Term MIPs.

Thanks again

Jeet

 

[sibumajumdar]

Hi Friends

Is it advisable to invest 5K or lumpsum (if i receive sudden surplus) each month SIP to MIP (Reliance MIP or HDFC Long Term MIP) and hold it for one year and then do STW (Systematic Withdrawal) for steady fix income each month?

This is what I thought the best way after reading some financial articles. I know the LTCG would be better so withdrawing after 1 year would make sense.

I have a disorganized fluctuating income and many times there could be rainy days which could last for many months even a year. I have passed through this phase so I know how horrible it is. So when the sun shines can I adopt this strategy? By this way, I don't have to worry for fix monthly income if i put a decent amount in MIPs.

Please criticize my thoughts if you feel so. I thought instead of FDs, this would be best way and my picks are Reliance MIP and HDFC Long Term MIPs.

Thanks again

Jeet

Dear,

Both MIPs are top class and their returns much better than FDs.. It is advisable Not to invest in one go but follow SIP method or invest partly whenever mkt goes down300 points. All the best...SLMuncle

 

[asterix24]

Hi Jeet,

Your choice of MIPs are good. However, I want to ask a question. In the current scenario, increased rates are order of the day i.e. FDs are having some wonderful returns not seen for last decade or so. Any reason why you decided against FD?

I had another question. You said you have a fluctuating income. If so, how will you be able to honor SIP? Instead, inculcate a discipline of buying the Funds as and when you have cash.

Fluctuating Income is a sign of entrepreneurs. If so, BEST OF LUCK!!!!

Happy Investing !!

 

[life2007]

Hi

Thank you.

Yes you are right about FDs. The interest rate are on increase but I think the scenario will change once inflation comes down. If you notice carefully, banks have been smart to raise attractive interest rates for short terms like 6 or 9 months.

Though I will still have some money on FDs, I believe post tax returns they actually come to 6-7% and with inflation.. I think it will be almost zero if not negative.

Now MIPs are not going to give sky high than FDs, but looks like from what I read is they are better in taxation and also give bit more than traditional FDs if stay invested for atleast 3 years.

Also they have flexibility. What I am thinking is not to put so much in equity funds at one go especially in this rising market but park some funds in MIPs. Then depending on situation, I will either opt for systematic withdrawal for regular monthly income after atleast 2 years, if the money flow is still decent, then I will switch again by systematic transfer to equity diversified funds.

Regarding your second question, whenever there is fluctucating income, I will opt for SIP only 6 months and then again go for another six months.

Fluctuating Income is a sign of entrepreneurs. If so, BEST OF LUCK!!!! - Thank you.. I am exactly not to into it but yes my vision is there and I am still in struggling phase with occasional rise income and hence it is very important for me to plan things so that regular income creeps in whether that particular month goes well or not.

What do you think about my comments above?

Thanks

Jeet

 

[asterix24]

Hi Jeet,

From a taxation plus inflation perspective, you are right. However, MIPs work in a different way. MIPs give good returns when market is heading south (as potentially the case may be now) and are typically inversely proportional (sorry about the mathematical term) to market.

I quoted FDs as the returns from MIP in last year or so hasn't been that attractive and hence, suggested to have a look at FDs. In the same vein, have you had a look at the close ended schemes being floated around by AMCs?

These close-ended fixed tenure schemes are returning some attractive nos. and are tax-friendly. Have a look at them. I am not following that segment and hence, am unable to recall a name that could have helped you. Let me check...

Happy Investing !!

 

[life2007]

Hi asterix24

Thank you.

Ok, I got your point that it is not the wisest thing to invest in MIPs now since as and when the market goes up, MIPs perform less and vice versa.

As we cannot be sure how it will behave though logically it should potentially head south, my main concern is when my current income dries up and I face rainy days. I do not want to disturb the amount of my Equity MFs as it is meant long term and capital appreciation. This has happened before and I have to start all over again and redeemping MFs in short period means losses.

I just want to invest some amount 5K-7K in MIPs and that too scattered over the month like 1K or 0.5K in different dates of the month. This way the voltality will be taken care of. After one year if the situation is bad about my inflow, I can start STW and if not, I might transfer some amount to equity or keep it as it is.

Do you support my idea or you strongly oppose it?

Not sure if I am allowed to paste links here, but I think it is ok. I read an interesting article regarding MIPs and would want to share with you and others.

http://frenzyindia.blogspot.com/2011/02/monthly-income-plans-detailed-guide-on.html

Thanks

Jeet

PS : Thank you for your suggestion for close-ended fixed tenure schemes. Honestly, I would not want to look at it now as my head is spinning with so many things to look after now . I am trying to keep things as simple as it can be but still there are so many ifs and buts here..and my dumb brain is crying aloud ... lol

 

[asterix24]

Hi Jeet,

Sorry if I have been the cause for overload. I support your idea and I think you should go ahead with it.

Happy Investing !!

 

[life2007]

Hi asterix24

Not at all, you have been very supportive. What I meant my 'overload' is that my dumb brain cannot too many complicated things of this investment world.

Please do misunderstand me.. Had it not been you guys, I would have not known about many of these things.

Thanks a lot

Jeet

Hi Jeet,

Sorry if I have been the cause for overload. I support your idea and I think you should go ahead with it.

Happy Investing !!