A person who intends to invest 40 Lakhs may have got retirement money or sold some of his/her investment/property or got some inheritance. There are many investment avenues where a person can invest one time and earn a regular monthly income to meet day-to-day expenses.
Investment Options to Invest 40 Lakh
A standard Savings plan can be defined as a product that can help you to save and also create a corpus that can further help you to meet your future needs. The simplest form of a saving plan is an Investment in Saving Bank Account but the return on this type of investment will be very low and it would not even beat the inflation rate. To earn a monthly income that is at a higher rate than the inflation rate, it is important to choose investment products that will give higher returns/interest.
The choice of investment or savings plan will depend on the investor’s needs, investor risk appetite, and inflation. A Pension Plan, Mutual Fund, Unit Linked Insurance Plan, Fixed Deposit, and other such monthly Schemes are some of the investment options available to investors.
To earn monthly income, investors should also ensure that he/she doesn’t invest all the amount in a single product. It is necessary to diversify risk and invest in multiple products to get optimum returns and mitigate risk. Further, it is also necessary to invest in such a way that a minimum guaranteed amount is assured and insurance cover is also available.
The optimal investment strategy will be to invest in a bunch of investment products that will give good returns with the lowest risk.
Immediate and Deferred Annuity Plans
These products can be classified under a Pension plan which generally comes with a guaranteed income stream after retirement. An investor can choose from which age he/she intends to start receiving the income from these plans.
In the case of Immediate Annuity Plans, investors will invest all the amount in one go, say, for example, 40 Lakhs, and start receiving income from the next month till the time of death.
A deferred Annuity Plan also involves an investment of a lump sum amount. The difference is that the investor will start to earn an income monthly after a certain period, that is, the income is deferred for a certain period.
This pension plan is a good investment option when the investor needs to protect his/her monthly income after retirement.
Lump Sum Mutual Fund
Investment in Mutual Fund can give handsome returns to investors, but at the same time it can be risky and there is even a chance of erosion of capital. Returns on Mutual Funds will depend on the market forces as well as the Mutual Fund scheme the investor has chosen.
There are different types of mutual funds viz. Equity-oriented, Debt funds, and Hybrid funds (which invest in both Equity and Debt). Investors will have to choose a mutual fund scheme based on the expectations of returns as well as the risk appetite. It is always advisable to have a diversified portfolio – so a proper balance would not only manage risk but will also give handsome returns. To ensure monthly income, one will have to invest in Debt Funds as well as choose the Dividend option in the case of Equity-oriented mutual funds.
Unit-Linked Insurance Plans
ULIPs or Unit-Linked Insurance Plans happen to be one of the most popular types of investment products. They invest the investor’s money in the market to give them regular returns. Besides, these types of schemes can also provide insurance coverage to investors. Depending upon the policy chosen, a certain amount of investment will go towards the insurance premium and the rest will be invested in the market-linked products which will give a monthly income to the ULIP holder.
In case of the death of the ULIP holder, the life insurance cover will give financial security to the surviving family. The proceeds from ULIP can be received in a lump sum amount or can be received in monthly installments. Investments in ULIP will also give tax benefits to the investor and will save a good amount of tax in the year this investment is made.
Guaranteed Monthly Income Schemes
This is one of the traditional saving plans which will give guaranteed monthly income to the investors. These monthly schemes will give the investor maturity benefits as well as a death benefit in case of death during the term of the policy. Investors will also get the benefit of bonuses and loyalty during the term of the policy which will get accumulated. One of the best things about this type of plan is that you can enjoy tax benefits on the pay-out benefits received and premiums paid. So, it provides the option to earn an additional tax-free income on a regular basis.
Investors can choose between receiving a lump sum amount upon maturity or as a monthly income. An investment of 40 Lakhs in such schemes will enable the investors to earn a regular income every month for more than 30 years.
Fixed Deposits are another traditional investment instrument. In the case of Fixed Deposits, investors are required to invest a lump sum amount and will get a monthly income in the form of interest from the Bank and in other such methods.
The return on these Fixed Deposits will be a moderate one (around 5% to 6%), depending on the tenure of the deposits and the bank or financial institution with which the Fixed Deposits have been placed. Senior citizens get slightly higher returns for their investments in Fixed Deposits. If one invests 40 Lakhs in Fixed Deposits, one will get the monthly interest of around INR 16,000 to INR 17,000 at a 5% rate. This type of passive investment is considered more secure than investing in mutual funds, etc. but it does not give very high returns. If the investor does not need interest every month, then it can be accumulated and it will result in earning compound interest which will give slightly higher returns.
As discussed above, there are multiple avenues for investments that are available to an investor who is looking to invest 40 Lakhs to earn a regular income every month. Depending upon the income that needs to be generated per month, the tenure of the investment, and the risk appetite of the investors, a sound investment plan can be drawn to ensure that the investor gets regular monthly income from investment by taking an optimum or minimum risk.
Bharti AXA Life Insurance has various products and monthly schemes including a ULIP, a Savings plan, and a best Pension plan which will give regular income to the investor. Bharti AXA Life Insurance is trusted by millions of investors and is a leading company with sizeable assets under management.
Investors should invest 40 Lakhs in different products comprising of high risks and low risks to earn a regular income every month.
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.