Monthly Income Plan (MIP)
Monthly income plans (MIPs) are mutual funds that invest primarily in fixed income and money market instruments and a minor percentage of their assets in equity and equity-related securities. The fund firms pay out a consistent income to their investors regularly. However, since it’s a market- linked product, this sum is not fixed and is determined by the fund's performance. It is not assured because mutual fund performance influences the returns.
There is also the possibility of negative returns. As a result, you must assess your risk profile before electing to invest in a best investment plan for monthly income. Monthly income plans come in two types: growth and dividends.
Monthly income plan with a growth component
Earnings on the capital are added to the invested amount in this plan. Money is not paid out to the investor at periodic intervals. It allows for the generation of riches as well as the expansion of the investor's assets.
Dividend-oriented monthly investment plan
These plans generate dividends as part of their earnings. Individual dividends are not subject to taxation. Dividends are paid from the AMC's distributable surplus when the fund makes a profit in the market.
Monthly Income Scheme at the Post Office
Because the government backs it, it is an ideal investment option for risk-averse individuals searching for a steady income stream. It is currently offering monthly income scheme interest rate of 6.6 per cent per annum. The deposit period for this scheme is five years. Individual accounts can invest up to Rs 4,50,000, while joint accounts can contribute up to Rs 9,00,000. This MIS allows you to start investing as little as Rs 1,500. When the investment matures, it can be re-invested for a second five-year period.
Bonds Issued by the Government
For risk-averse investors, government bonds are a great low-risk investing alternative. currently Government bonds are available to invest up to 40 years of maturity. Government bonds pay regular interest or offer coupon payments that the Indian government determines. Bonds issued by the government have a set maturity date. The primary goal of government bond issuance is to raise funds for infrastructure development.
Deposits Made by Corporations
Corporate deposits are available from a variety of non-banking financial firms and housing finance businesses. These are comparable to bank deposits, except that you invest with a corporation, which is less secure than a bank deposit. Corporate deposits pay a high interest rate as compared to bank deposits. You should evaluate the NBFC's financial strength and reliability before investing in corporate deposits. You can refer to the CRISIL ratings to help you with this.
Senior Citizen Savings Scheme
A senior citizen savings plan (SCSS) is an excellent investment choice if you are a senior citizen. The government backs it, and only senior citizens over 60 are permitted to invest. This scheme is available at notified bank branches and post offices. However, you must enrol in the plan within one month of retirement. SCSS offers an annual interest rate of 7.4 per cent, which can be paid weekly for five years. The SCSS allows you to invest a maximum of Rs 15 lakh, or your retirement corpus, whichever is less. The interest from the program, on the other hand, is added to your taxable income and taxed according to your tax rate.
Picking the correct monthly income deposit scheme will help you and your family in the long run. So, now that you are aware of the best investment plan for monthly income, ensure you pick the right finest option for you.