Life Insurance Corporation (LIC) is renowned for offering secure investment opportunities and life insurance. However, beyond its traditional insurance products, LIC mutual funds present a lucrative avenue for those looking to maximize returns while ensuring regular monthly income. This article explores how an investment of ₹3 lakh in LIC mutual fund scheme can generate a monthly income of ₹26,000 over time, leveraging the power of compounding and strategic fund selection.
Also see: What is LIC Bima Sakhi (Women Career Agent) Program?
Understanding LIC Dual Role: Insurance and Investment
Friends, there are two companies of LIC in the market: Life Insurance Corporation of India and LIC Mutual Fund Limited, both of these are government companies.
For individuals seeking life insurance coupled with returns, Life Insurance Corporation of India is the best option, as it offers a life cover along with returns ranging from 6% to 8%. On the other hand, those prioritizing higher returns without life insurance can opt for LIC Mutual Fund Limited, where returns typically range from 15% to 22%.
To invest in LIC life insurance products, individuals must contact an LIC agent. However, investments in LIC Mutual Funds can be made via investment apps or through LIC investment advisors. The toll-free helpline number provided for personalized guidance is 1800-258-5678.
Also see: LIC New Jeevan Shanti Plan 758
Step-by-step Guide to Achieving ₹26,000 Monthly Income
Step 1: Initial Investment in LIC Small Cap Fund
Friends, now we assume here that you do not want any kind of insurance cover and you are only investing your money in LIC mutual fund for good returns and also want to get monthly income.
The first step in this strategy is to invest ₹3 lakh in LIC Small Cap Fund Direct Growth. This fund has shown impressive historical performance:
- Last 6 months: 12% return
- Last 1 year: 42% return
- Last 3 years: 24% annualized return
- Last 5 years: 30% annualized return
Now friends, you have to keep this ₹3 lakh invested in this small cap mutual fund of LIC like FD for 15 years because it is a small cap mutual fund, so there is a possibility of getting good returns in it. We assume that the expected return from this mutual fund will be 20%.
Also see: LIC New Money Back Plan 720
Step 2: Transition to a Large Cap Fund
After the investment completes 15 years, the estimated return on ₹3 lakh grows to ₹43,22,106 at a 20% annualized return rate. Now we will not take much risk on this and will now invest this money in LIC Large Cap Fund. LIC will invest this money in shares of big companies from where we get an annual return of 15% even in the worst situation.
Friends, when you invest this money in LIC large cap fund, then here you have to choose the option of SWP (Systematic Withdrawal Plan). SWP works similarly to SIP, but instead of investing money monthly, it allows you to withdraw a fixed amount each month.
Also see: LIC Jeevan Tarun Plan 734
Step 3: Monthly Income Realized Through SWP
When you invest ₹33 lakh in a large-cap mutual fund and opt for SWP, from the very next month, you will begin receiving ₹26,000 as monthly income for a lifetime. Over the course of 10 years, you would have withdrawn ₹31.2 lakh. Even after these withdrawals, you will still have a remaining balance of ₹1 crore, which you can withdraw at any time after the 10 years. If you choose to leave this amount invested, it will continue to grow with compounding interest. Additionally, you can increase the withdrawal amount later or choose to withdraw it at any point.
Also see: LIC Revised Jeevan Amar Plan 955
Compounding: The Wealth Multiplier
The power of compounding is central to this strategy. Even after regular withdrawals, the investment grows, creating a perpetual income stream. This ensures financial security and flexibility, as the remaining corpus can be withdrawn, reinvested, or left to grow further.
Flexibility in Investment Duration
The outlined plan is customizable. Investors can modify the duration of their initial investment phase or the frequency and amount of withdrawals based on their financial needs. Whether it’s a 10-year or a 20-year plan, LIC Mutual Fund offers adaptable solutions.
Risk and Advisory
While mutual funds offer significant returns, they are subject to market risks. Investing in small-cap funds, in particular, requires a higher risk tolerance due to market volatility. Prospective investors are advised to consult with financial advisors or use trusted investment platforms like Groww, Zerodha, or Angel One for better decision-making.
Accessing LIC Mutual Fund Services
LIC Mutual Funds can be accessed via:
- Apps: Platforms like Groww, Zerodha, and Angel One.
- LIC Advisors: For personalized guidance, LIC’s toll-free helpline (1800-258-5678) connects investors to advisors who provide tailored recommendations.
Benefits of Choosing LIC Mutual Funds
- Superior Returns: Compared to traditional instruments like Fixed Deposits, LIC mutual funds offer significantly higher returns.
- Regular Income: The SWP feature ensures predictable monthly income.
- Financial Freedom: A strategic blend of high-growth and stable funds provides wealth accumulation and security.
- Government-backed Assurance: As a government-owned entity, LIC instills trust and reliability.
Conclusion
LIC Mutual Funds exemplify the synergy of high returns and financial stability. By leveraging the potential of small-cap and large-cap funds, investors can transform a modest one-time investment into a lifetime income stream. While risks are inherent, careful planning and consultation with advisors can mitigate uncertainties, making LIC Mutual Funds a prudent choice for wealth creation and monthly income.
This investment roadmap underscores the importance of long-term planning and the power of compounding. Whether you’re an aspiring retiree seeking steady income or an investor looking for growth, LIC Mutual Funds can pave the way to financial independence.
FAQs
What is the minimum amount required to invest in LIC mutual funds?
The minimum investment amount depends on the specific mutual fund scheme. For example, the LIC Small Cap Fund typically allows investments starting from ₹5,000, but for the strategy outlined in this article, a one-time investment of ₹3 lakh is recommended.
How does the Systematic Withdrawal Plan (SWP) work?
SWP enables investors to withdraw a fixed amount monthly from their mutual fund investment while the remaining corpus continues to generate returns. This ensures a steady income stream while preserving and growing the investment.
Are LIC mutual funds safe compared to other investment options?
While LIC mutual funds are managed by a reputed government entity, they are subject to market risks like all mutual funds. Diversified funds like large-cap funds are relatively, whereas small-cap funds carry higher risk but offer greater growth potential.
What happens if I want to withdraw my investment before the 15-year period?
You can withdraw your investment anytime, but early withdrawal may impact the compounding benefits and returns. Exit loads and capital gains tax may also apply, depending on the tenure and type of mutual fund.
Can I modify the withdrawal amount in the SWP later?
Yes, SWP is flexible, and you can adjust the withdrawal amount as per your financial needs. However, increasing the withdrawal amount may reduce the remaining corpus and future income potential.
Disclaimer: Mutual funds are subject to market risks, and past performance does not guarantee future returns. The strategies outlined in this article are for informational purposes only and should not be considered financial advice. Investors are advised to assess their risk tolerance and consult a qualified financial advisor before investing in LIC Mutual Funds or any other financial instruments.