What Corpus Do You Actually Need?
The most common question — and the most personal. But here's a framework:
- Estimate your monthly expenses in India in today's money (include rent/EMI, food, healthcare, lifestyle, travel)
- Apply the 25× rule: corpus needed = annual expenses × 25. This assumes a 4% annual withdrawal rate, which is considered sustainable for 30 years
- Add a buffer of 20% for healthcare costs that rise faster than inflation
Example: If you need ₹1.5L/month (₹18L/year), your target corpus is ₹18L × 25 = ₹4.5 crore. With 20% healthcare buffer, aim for ₹5.4 crore.
Building the Corpus with SIP
SIP in Indian equity mutual funds is the most efficient accumulation tool for NRIs. Key facts:
- NRIs can invest in Indian mutual funds from their NRE account (tax-free returns on equity gains up to ₹1.25L/year)
- Historical equity mutual fund returns: 12–15% CAGR over 10+ year periods
- Use step-up SIP — increase your SIP by 10% each year to match salary growth. This dramatically accelerates corpus building
| Monthly SIP | Step-Up | Years | Corpus (at 12%) |
|---|---|---|---|
| ₹25,000 | 10%/yr | 15 | ~₹1.8 Cr |
| ₹50,000 | 10%/yr | 15 | ~₹3.7 Cr |
| ₹1,00,000 | 10%/yr | 15 | ~₹7.4 Cr |
| ₹50,000 | 10%/yr | 20 | ~₹8.5 Cr |
Withdrawing Sustainably with SWP
Once you return to India and stop earning, switch to SWP from your corpus. Instead of selling mutual fund units in a lump sum, SWP sells just enough units each month to fund your withdrawal — while the remaining corpus keeps compounding.
- Keep withdrawal rate at or below 4–5% of corpus per year for long-term sustainability
- Step up your withdrawal by 5–6% per year to offset inflation
- Keep 1–2 years of expenses in liquid funds / FD as a buffer — don't touch equity in a market downturn
Tax on SWP After Return to India
When you return and become a resident, your SWP withdrawals from equity funds are taxed as capital gains:
- LTCG (units held >1 year): 12.5% on gains above ₹1.25L/year
- STCG (units held <1 year): 20%
- Debt fund gains: Taxed at slab rate regardless of holding period (post-2023)
Structure your SWP to stay within the ₹1.25L LTCG exemption where possible, especially in early retirement years.