Achieving a stable, monthly passive income can be a life-changing financial goal. Earning 3 lakh rupees passively every month after just three years of investing is achievable but requires careful planning, a disciplined approach, and, most importantly, an understanding of where to invest. Here, we’ll explore different investment options and break down the approximate investment amount you need for each.
1. Setting Your Investment Goal and Strategy
To earn 3 lakh rupees monthly from passive income sources, we need to break down the process into two parts:
- Calculating the Total Fund Required: Assume a realistic return of 8% annually in safer investment avenues, which translates to 0.67% monthly.
- Investment Horizon: Since we are looking at a 3-year plan, we need to choose high-growth but relatively secure assets.
Assuming a monthly passive income goal of 3 lakh rupees, the amount needed to earn this consistently from a safe 8% annual return is about 4.5 crore rupees.
Why 4.5 Crore?
With a monthly return of approximately 0.67% on your total investment, 4.5 crore rupees would yield around 3 lakh rupees per month.
2. Investment Options for 3 Years
To achieve a 4.5 crore corpus in 3 years, you’ll need to focus on a mix of high-yield investments. Here are some options:
a. Mutual Funds (Equity-Focused)
- Expected Returns: 12-15% per annum
- Recommended Allocation: 50% of investment amount
Equity mutual funds, especially aggressive hybrid and large-cap funds, have historically provided strong returns for investors willing to stay invested over 3 years. By investing 50% of your target corpus in well-researched mutual funds, you have the potential to benefit from stock market growth with comparatively lower risk than individual stocks.
Top Picks:
- Large-Cap Funds: Suitable for moderate risk with consistent returns.
- Aggressive Hybrid Funds: These funds balance equity with debt, reducing risk but allowing for growth.
b. Direct Stock Investments
- Expected Returns: 15-20% per annum (with active management)
- Recommended Allocation: 25% of investment amount
Stocks offer higher growth potential but come with greater risk. If you have knowledge of stock trading or access to an advisor, investing in well-researched stocks in sectors like technology, pharmaceuticals, and financials can accelerate your portfolio’s growth.
Tips:
- Blue-chip Stocks: These are financially strong and stable companies that can be a safe choice for moderate growth.
- Growth Stocks: Companies expected to grow at a faster rate but may carry higher risk.
c. Fixed Deposits and Debt Funds
- Expected Returns: 6-7% per annum
- Recommended Allocation: 15% of investment amount
While fixed deposits (FDs) offer lower returns, they are among the safest investments. Debt funds also provide stable returns with slightly higher risk than FDs. These investments can balance your portfolio, providing security and reducing volatility.
Suitable FDs and Debt Funds:
- Corporate FDs: Some companies offer FDs with a slightly higher return than banks.
- Debt Mutual Funds: Choose liquid or short-term debt funds for added flexibility.
d. Real Estate Investment (REITs)
- Expected Returns: 8-10% per annum
- Recommended Allocation: 10% of investment amount
Real estate investment trusts (REITs) allow you to invest in commercial real estate without purchasing property. REITs can yield monthly or quarterly dividends, providing steady passive income. They can also appreciate over time, potentially increasing your corpus.
Top REIT Choices:
- Embassy Office Parks REIT: A well-known REIT in India with a reliable track record.
- Mindspace Business Parks REIT: Another good choice, with regular dividend payouts.
3. Monthly SIP Calculation for 3 Years
If you’re starting from scratch, you can build the target corpus by investing approximately 90,000 to 1 lakh rupees per month in the above options. Here’s a sample SIP breakdown for each category:
- Mutual Funds: 50,000 INR/month
- Direct Stocks: 25,000 INR/month
- Debt Funds/FDs: 10,000 INR/month
- REITs: 5,000 INR/month
- Crypto’s : (Optional)
Important: This breakdown assumes a strong 10-12% return over three years, achievable with disciplined investment in high-growth areas.
4. Rebalancing Your Portfolio
As you approach the end of the 3-year period, gradually shift to safer investments to protect your corpus. For instance, you may want to reduce your allocation to stocks and increase your holdings in debt funds, FDs, or REITs to secure the funds.
5. Consider Tax Implications
Passive income is often subject to taxation. Here are some points to keep in mind:
- Dividend Income: Dividends from REITs and stocks may be taxable.
- Long-Term Capital Gains (LTCG): Mutual funds held for over one year qualify for LTCG tax, which is lower than short-term tax rates.
- Interest on FDs and Debt Funds: These are taxable as per your income slab.
Conclusion
Creating a passive income stream of 3 lakh rupees per month in 3 years requires careful planning, regular investing, and an understanding of market risks. By diversifying across mutual funds, stocks, FDs, and REITs, and by following a disciplined SIP approach, you can achieve this ambitious target.
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