How Much Money to Invest in Shares for a Monthly Revenue of 1 Lakh?
Investing in the stock market can be a rewarding endeavor, but it should not be considered the primary source of a regular and dependable income, especially not if you are aiming for a monthly revenue of 1 lakh (100,000 INR).
Why Not the Stock Market?
The stock market is not designed to deliver regular and predictable monthly revenues. While the stock market can provide good returns over a long period, it is not an ideal place to focus solely for generating a fixed income stream. Other investment avenues, such as bonds, fixed deposits (FDs), and nationalized and corporate commercial papers (NCDs), are typically better suited for consistent and regular income.
Alternative Investment Options for Monthly Income
If your goal is to generate a steady monthly income, consider investing in bank fixed deposits (FDs), or fixed-income instruments from reputable finance companies. Mahindra Finance and Shriram Finance, for example, offer FDs with regular interest payouts, providing a more dependable and secure source of income.
Factors to Consider for Investment in Shares
Even if you are interested in investing in shares for a higher rate of return, achieving a specific monthly revenue like 1 lakh is not straightforward. The amount of money needed to invest can vary widely based on several factors, including:
Expected Rate of Return
The higher the expected rate of return, the less money you need to invest. For instance, an expected annual return of 10% would require an investment around 1.2 crores (12 million INR) to generate a monthly revenue of 1 lakh. However, this is highly speculative and comes with significant risks.
Time Horizon
Your investment horizon also plays a crucial role. If you are looking to generate a 1 lakh monthly revenue over a longer period, you might not need to invest as much at the outset. However, this would involve a more extended time frame for realizing your earnings.
Investment Strategy
Your investment strategy can also affect the amount you need to invest. Diversification and a conservative approach can help mitigate risks, but this also depends on the stability of your chosen stocks and the overall market conditions.
Investment Risks and Diversification
Investing in shares is inherently risky. Market volatility, economic downturns, and company-specific risks can all impact your returns. Therefore, it is essential to diversify your portfolio and avoid relying solely on investment income for monthly expenses. Financial educators often advise against using investment returns for immediate expenses, as these incomes can be irregular and unpredictable.
Seek Professional Advice
Before making any investment decisions, it is advisable to consult with a licensed financial advisor. They can provide personalized advice based on your financial goals, current financial situation, and risk tolerance.
While the idea of relying on the stock market for a fixed monthly revenue of 1 lakh is enticing, it's wise to approach it with a well-rounded strategy that includes diversified investments and a robust financial plan. Happy investing!