Imagine having ₹1 crore at your disposal. It’s a substantial amount that opens up numerous opportunities to generate passive income. While securing a fixed income isn’t always possible in the world of investments, a strategic allocation can help you achieve financial stability and peace of mind. Here’s how you can split your corpus and invest wisely to create a steady stream of passive income.
Investing ₹1 crore can seem daunting, but with the right strategy, you can turn this corpus into a reliable source of passive income. By dividing the amount into a 50:25:25 ratio, you can balance risk and returns while ensuring a steady cash flow. Let’s explore this strategy in detail, focusing on dividend-yielding stocks, real estate investments, and mutual funds.
Dividend-Yielding Stocks and InVITs: ₹50 Lakhs
The first step is to invest ₹50 lakhs in high-dividend-yielding stocks and Infrastructure Investment Trusts (InVITs). Companies like Vedanta, Hindustan Zinc, or other Public Sector Undertaking (PSU) stocks, as well as funds like PGInvIT or IRBInvIT, are known to offer annual dividends of around 10%-12%. This means you can expect a yearly dividend of ₹5 lakhs from this portion of your investment.
Dividend-yielding stocks are a relatively safe bet because they not only provide regular income but also have the potential for capital appreciation. InVITs, on the other hand, offer the benefit of regular cash flows through dividends, which are backed by stable infrastructure assets.
Real Estate Investment: ₹25 Lakhs
Next, allocate ₹25 lakhs to real estate. Instead of investing in Real Estate Investment Trusts (REITs) on the stock market, consider buying a fraction of a property or investing directly in commercial properties through companies. This approach can provide a rental yield of 7-8% per year and an annual appreciation in property value of around 5-6%.
With a rental yield of 7-8%, you can expect to earn ₹1.75 to ₹2 lakhs annually from rent. Additionally, the property’s value appreciation at 5-6% means an increase in the property’s worth by ₹1.25 to ₹1.5 lakhs per year. This dual benefit of rental income and property appreciation makes real estate a robust addition to your investment portfolio.
Mutual Funds: ₹25 Lakhs
The final ₹25 lakhs should be invested in a well-researched mutual fund with a solid reputation for delivering consistent returns. opt for a direct growth plan and aim for a 12% annual return. This strategy allows you to redeem only the profits each year, preserving your principal investment (Classplus)
Read this also: Steps to explore the Right Mutual Funds for Your Goals
Assuming a 12% return, your mutual fund investment could yield ₹3 lakhs annually. This approach not only provides a decent annual income but also benefits from the power of compounding, thereby enhancing your wealth over time.
Total Earnings and Managing Expenses
By diversifying your ₹1 crore corpus across dividend-yielding stocks, real estate, and mutual funds, you can generate a significant passive income. Here’s a breakdown of your expected annual earnings:
- Dividends from Stocks and InVITs: ₹5 lakhs
- Rental Income from Real Estate: ₹1.75 to ₹2 lakhs
- Profit from Mutual Funds: ₹3 lakhs
In total, you can expect to earn approximately ₹9.75 to ₹10 lakhs annually. This amount can comfortably cover your living expenses, especially if you plan and budget wisely.
Peace of Mind in Recession or Layoffs
One of the biggest advantages of this diversified investment strategy is the financial security it offers during economic downturns, such as recessions or job layoffs. With multiple streams of income, you are less reliant on a single source, which can help you navigate through tough times without significantly compromising your lifestyle.
Additionally, the appreciation in property value and the compounding returns from mutual funds ensure that your wealth grows steadily, providing a buffer against inflation and economic uncertainties.
Conclusion
Investing ₹1 crore wisely can transform your financial landscape, providing you with a steady stream of passive income and peace of mind. By allocating your corpus across dividend-yielding stocks, real estate, and mutual funds, you can achieve a balanced investment portfolio that offers regular income and growth potential. This strategy not only helps you manage your expenses comfortably but also ensures financial stability during economic uncertainties. So, start researching and investing wisely to secure your financial future.
