Systematic Withdrawal Plan from fairness MFs not really useful

I’ve been repeatedly investing in numerous mutual funds schemes by SIPs for the final 10 years, and my present portfolio is round ₹50 lakh. Now I’m about to retire, and I may also get Rs30,000 as pension monthly. I need to begin a Systematic Withdrawal Plan (SWP) from my mutual fund investments. Can you inform when the correct time to take action is? What components ought to I take into account?

–Arjuna Reddy

Answers by Sanjiv Bajaj, joint chairman and MD, Bajaj Capital:

It is nice that you just took an funding choice a number of years in the past to put money into mutual fund schemes by the Systematic Investment Plan (SIP) route. Since you might have collected a good quantity of Rs50 lakh, it might make sure that your retirement is comfy.

However, please notice that we don’t advocate SWP or Systematic Withdrawal Plan from fairness mutual fund schemes. We recommend you turn an quantity of Rs30 lakh out of your whole portfolio of Rs50 lakh to few money owed fund schemes like medium-term revenue plan, banking and PSU debt fund, or company bond funds after which begin an SWP from these debt fund schemes.

The remaining quantity of Rs20 lakhs in fairness mutual funds must be left there in order that it continues to develop, and you could once more change this quantity to debt funds after few years, at any time when your debt fund portfolio is completed. However, please notice that while you change from fairness mutual fund schemes to debt mutual fund schemes, you must handle your long-term capital achieve tax legal responsibility and make sure that you pay the tax, if due any.

I had bought a home two years in the past at a price of Rs85 lakh. But I don’t like the situation and infrastructure round it. Hence, I’ve determined to promote it. Due to depressed situations, I’m solely getting Rs75 lakh because the sale worth. Would you please let me know whether or not I can set off the lack of Rs10 lakh towards my different enterprise revenue and save tax?

–Rakesh

You should notice that since you’re promoting the property in lower than three years after buying it, the loss being incurred by you shall be handled as a short-term capital loss. This short-term capital lack of round Rs10 lakhs can’t be set off towards enterprise revenue or wage revenue and so on. It can solely be set off towards any capital achieve revenue, whether or not short-term or long-term. If you might have quick time period or long-term capital achieve from promoting some other property or shares/mutual funds and so on., then you could be allowed to set off this loss towards the positive aspects made by you.

Also, please notice that short-term capital loss could be carried ahead for eight years, and also you might be able to set off the loss towards the capital achieve revenue in any of the longer term years.

(Please ship queries and views at mintmoney@livemint.com)

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