Generate Monthly Income with 10 Lakhs: 5 Swing Strategy
What is Swing Investing?
You have heard of SIP, you have heard of lump sum, but there is a third way to invest—one that quietly beats both. It automatically books profits, reduces risk, and continues to compound your wealth, even when the markets are sideways. Most investors have no clue that it exists.
Swing investing in mutual funds is not day trading; it is not market timing. Instead of investing all your money on one date, split, say, 10 lakhs rupees into smaller equal chunks and invest them on staggered dates within a month. You can do it weekly, say every Monday. You invest in different index mutual funds. Now, when the fund price, that is the NAV, rises by about 5% above your purchase price, you book that profit.
You do not wait endlessly for that perfect moment or the next bull run. You take the profits and you reinvest the capital in the next cycle.
How Does Swing Strategy Work?
Step 1: Select Index Funds
You first pick about 15 to 20 mutual funds —only index funds with zero exit load —and split them between NIFTY, SENSEX, and MIDCAP, depending on your risk profile.
Step 2: Divide and Deploy Capital
Divide your total amount to be deployed (10 lakhs). Instead of investing it all at once, you break it into smaller chunks and you spread them out across the month, say 4 phases every Monday or every Wednesday. For example, you could invest about 5% of the total amount each week, or $50,000. Over a month, you would roughly invest two lakhs, and by the end of 5 months, your entire 10 lakh capital would be systematically deployed.
Now comes the choice: should you keep investing in the same index fund every week, or should you switch between a few of them? That is entirely up to you. The key is to pick up funds with zero exit load and a low TER, and preferably older funds with higher AUM, so your tracking error stays low.
You can either stick to 4 index funds, or you can rotate through each of them every month, or you can pick different ones. Both approaches work. If you use other funds, it is easier to track which fund reaches the 5% profit target first. However, if you prefer using the same funds repeatedly, make sure to keep proper records. That is because every new purchase changes your average purchase cost. So, when the NAV rises by 5%, you will need to identify and sell only the earliest lot that hits the target, not your entire holding.
The idea here is discipline, small staggered investments, regular profit booking, and precise tracking of each lot. That is what makes this swing strategy both systematic and practical.
Step 3: Set Your Target
Once your investment is in place, set a simple rule. When the NAV rises 5% above your average cost, sell the lot and book a profit, unlike SIP or lump-sum investing, where you invest and wait for long-term compounding to do the heavy lifting. Here we are measuring how quickly the market can deliver 5%.
Track how many days each lot took to hit 5% and then you can calculate the annualised return. Over time, repeat this process across multiple of these funds and market cycles, and you will see a pattern. Some funds reach the target faster during a bull phase, while others take longer during a bear phase.
By tracking these intervals — how many days it takes to hit your target —you can calculate the annualised return of your portfolio and understand the actual performance, not just the nominal 5% target. This approach turns market volatility into opportunity. Instead of worrying about when the next rally will come, you are simply saying, whenever it comes, I will take my 5% profit, book it, and move on.
That is the power of a swing strategy. You stop waiting for long-term rewards, start letting short-term rewards pay you, and do that systematically. And what do you do with the money? Once you have booked the profit, you reinvest it in the next phase — your original capital into the swing cycle — either the coming week or once you complete the full 4- to 5-month deployment chain.
This keeps your money continuously in motion, compounding throughout the process and creating new opportunities, rather than sitting idle. That is the essence of swing strategy. You profit, reinvest, repeat, a disciplined cycle that keeps your capital productive. At the same time, you keep your emotions in check.
Step 4: Handle Market Downturns
What if none of your investments hit the 5% target after 5 months? None of your investments, let us say, hits your target. Do not panic. If that happens, start a fresh round of staggered investment, just like before. This will help you average your costs down and keep your portfolio aligned with market levels. So, if the market stays flat, stay patient; you will average down, and you will be ready when the next swing comes.
You can easily track all this in a Google Sheet. And here it will automatically show you funds that cross 5% on a gain level.
Expected Returns
Now, your essential question is what returns can you expect? Logically, it will align with the long-term market returns, which are in the 12-12.5 percent range. A back test by Fire in India showed an annualised return of about 10-12 percent, similar to the SIP. It showed an annualised return of about 10-12 percent, identical to SIPs, but with lower emotional stress and drawdowns. Here, you are systematically booking profits and taking them away. That way, you are managing the risk and volatility.
Swing Investing vs SIPs: Why Choose Swing?
So, why bother with swing investing if SIP can give you similar returns? That is a good question. If both can provide returns of around 10 to 12 percent, why complicate things? Well, it is not just about returns; it is about control, emotion, and liquidity.
In the swing approach, it is not about chasing higher returns every time. It is about managing behaviour and managing flexibility. SIP: You stay invested, but your portfolio falls in a bear market. That is when most of the investors lose patience. But with swing investing, you stay active: you book small parts of the profit, redeploy the original capital, take the profits away, and stay mentally light.
The other investment modes have different advantages and downsides. So, it is up to each individual. You know, there is an old idea that says sense is less than the mind, which is less than the intelligence. Every investor operates in these three dimensions, sometimes from the senses, sometimes from the mind, and sometimes from the intelligence zone.
When he works from the senses, he seeks instant gratification. That is where swing investing appeals. When he works from the mind, he builds habits and a discipline, like SIP investing. When he is actually operating in the zone of intelligence, he understands cycles, allocates across multiple assets, and focuses on wealth preservation and steady growth rather than very high returns.
Tax Considerations
Now, about taxes, every income is taxed, whether it is a salary or profits. So, why expect anything else from here? Tax is not a penalty; it is proof that your plan has actually worked. SIP builds wealth quietly while swing keeps you engaged. As you make it, it balances your goal of a decent return with better risk management by not holding on too long during unfavourable periods and also averaging the purchase cost over time.
In swing, you are booking profits regularly; in your SIP, you are letting it compound. Each suits a different temperament: some prefer activity, some prefer patience. And for those seeking periodic income rather than waiting many years, this approach might fit, because the profits are booked, you take them off, and you spend them. That way, you are actually minimising the volatility risk. And when someone says, But what about taxes on those swing profits, that is still the mind reacting. It is not the intelligence zone guiding; any income is taxable, including salary, rent, business income, profit, and dividends.
Core Principles of Swing Investing
Swing investing works because the market swings. It swings between optimism and fear. It combines two simple truths. First, the market does not move in a straight line. They swing between fear and grief. Second, discipline beats prediction.
So, by automating the entries and exits, you are letting the numbers decide, not your emotions. You avoid buying too high or staying stuck too long. If you are considering this, stick to index funds, large-cap, or diversified funds. Check for zero exit loads; keep expenses below 0.5 percent.
If you are a low-risk investor who does not want to take equity risk but wants to optimise returns, watch my video about switching gains from a liquid fund to a small-cap, keeping your original capital intact and avoiding any risk.
Please let me know in the comments section your views about this, and we can discuss it there.
