Should you add mutual funds to your portfolio as a source of recurring income?

The two main objectives of investments are capital growth and income. Mutual funds offer a wide range of investment options for both of these goals and various risk profiles. Mutual funds, however, are mostly connected to capital gains in India. Because solid equity mutual funds provide multiple times returns over an adequate investment term, retail investors' faith in mutual funds for wealth accumulation has been amply rewarded. There are many portfolio management services present in the market to give you goal-oriented guidance.

For many investors, the primary goal of investing is capital growth or wealth development; for the majority of investors, except senior persons, regular income is not a significant factor. The majority of mutual fund investors in India are from the salaried class, and they mostly rely on their paychecks to cover their daily living expenditures. Whatever the case, the most crucial financial need for every one of us is a monthly income, whether it comes from a wage or investments.

Consider a typical salaried worker in the upper middle-income range who is in their mid-to late-thirties or early forties. Take into account his usual monthly expenses, such as his home loan EMIs, his children's school fees, his energy and fuel bills, his grocery bills, his household staff's salary, etc. The majority of these costs are fixed costs that will never go away. Now let's ask the extremely unsettling question. What if he doesn't receive his pay the next month? He might have sufficient funds in his savings account to cover his monthly costs for a few months.

But what if it takes him longer than six months to receive his salary? Due to a lack of liquidity, he would have had to start redeeming his investments, first his mutual funds and then his fixed deposits. He will have to sell his mutual funds at a discount or perhaps a loss if the markets drop at the same time, which is terrible because bad luck frequently hits on several fronts. He will eventually find a new job, and his dilemma will gratefully be passed.