Most Retired people look for a Fixed Income for their Monthly requirements. We have presented such investment products with complete details
What is a Monthly Income Scheme?
A monthly income scheme is an investment option wherein an investor invests a certain amount and receives the returns on such investment periodically. There are multiple types of monthly income schemes available like monthly income fixed deposit, SCSS, POMIS, SWP mutual funds. All such investment options have one thing in common i.e. a periodic withdrawal income. Each investment differs in terms of risk, features, terms, and conditions. These schemes are either backed by the government or managed by a fund manager.
The information provided outlines six different investment options for generating regular income :
Monthly Income Fixed Deposit
Post Office Monthly Income Scheme
SWP Mutual Funds
Corporate Deposits
Senior Citizen Savings Scheme
Long-Term Government Bonds
1. Fixed Deposits with Monthly Payout Approximately 7.20% p.a wef 1st April 2023 { Income added in your Tax Slab}: A fixed deposit with monthly payout is a non-cumulative fixed deposit where the interest earned is paid out to the investor on a monthly basis. It offers a reliable and steady source of income, but the interest rate is lower than that of a regular fixed deposit.
2. Post Office Monthly Income Scheme (POMIS) 7.40% p.a wef 1st April 2023 { Income added in your Tax Slab} : POMIS is a government-sponsored scheme offered by the Department of Post in India. It provides a monthly income in the form of interest earned on the deposit. The scheme is backed by the government and offers a guaranteed interest rate with low credit risk.
Maximum investment limit for the Post Office Monthly Income Scheme :
Single Account : Rs. 9 Lakhs
Joint Account : Rs. 15 Lakhs
Minor Account : Rs. 3 Lakhs
3. Mutual Funds with Systematic Withdrawal Plans (SWP) You can fix ur own Amount { Income treated as Capital Gain}: SWP allows investors to withdraw a fixed amount periodically from their mutual fund investment. It provides flexibility in terms of withdrawal amount and frequency. SWP can help investors generate regular income while staying invested in mutual funds.
4. Corporate Deposits Approx 8.00% p.a wef 1st April 2023 { Income added in your Tax Slab}: Corporate deposits are offered by Non-Banking Financial Institutions (NBFCs) in India. They offer higher interest rates compared to regular bank fixed deposits. However, it's important to consider the credit rating of the NBFC before investing, as corporate deposits are not insured.
5. Senior Citizen Savings Scheme (SCSS) 7.40% p.a wef 1st April 2023 { Income added in your Tax Slab}: SCSS is a post office savings scheme designed for senior citizens in India. It provides regular income and financial stability post-retirement. SCSS offers a relatively high interest rate and qualifies for income tax deduction under section 80C of the Income Tax Act.
6. Long-Term Government Bonds { Income added in your Tax Slab} : Long-term government bonds are debt instruments issued by the Central or State Government. They offer a stable interest rate, lower risk, and liquidity. However, the yield may be lower compared to other investment options, and the longer maturity period increases market and interest rate risks.
Each investment option has its own features, benefits, and risks. It's important to carefully assess your financial goals, risk tolerance, and investment horizon before choosing the most suitable option. Additionally, consulting with a financial advisor can provide personalized guidance based on your individual circumstances.