Some people need regular income every month. Retirees need money for expenses. Homemakers want financial independence.
Where can you get steady monthly income from investments? Several options exist.
Let’s explore monthly income scheme choices among the best investment plan in India options.
What Is a Monthly Income Scheme?
A monthly income scheme is an investment giving regular monthly payouts.
You invest a lump sum. The scheme pays you fixed money monthly for a set period.
Think of it like reverse salary. Your money works and generates income. Principal usually returns at the end.
Post Office Monthly Income Scheme (POMIS)
Safest monthly income scheme. Government operated through post offices.
Invest 1000 to 9 lakh (single) or 15 lakh (joint). Current rate around 7.4% yearly with monthly payouts.
Five-year period. Principal returned fully at maturity. Zero risk with government backing. Great for senior citizens.
Senior Citizens Savings Scheme (SCSS)
Only for people above 60. Among the best investment plan in India for seniors.
Invest up to 30 lakh. Around 8.2% interest yearly. Quarterly payouts, not monthly.
Five years with 3-year extension option. Section 80C tax benefit on investment. Interest is taxable.
Bank Fixed Deposits with Monthly Interest
Banks offer FDs with monthly interest payout option.
Rates vary 6.5-7.5% depending on bank and tenure. Senior citizens get extra 0.5%.
Very safe. Deposits up to 5 lakh insured. Taxable income with TDS if interest exceeds threshold.
Not highest returns but very reliable monthly income scheme.
Mutual Fund Systematic Withdrawal Plans
SWP lets you invest lump sum and withdraw fixed amount monthly.
Example: Invest 10 lakh, withdraw 10,000 monthly. Works well with debt or balanced funds.
Tax efficient – only capital gains taxed, not entire withdrawal. Market risk exists. Capital can reduce if markets fall.
Among best investment plan in India for people comfortable with some risk.
Other Monthly Income Options
- Dividend Stocks/Funds: Companies pay quarterly or yearly dividends. Irregular income. Requires market knowledge. Tax benefits exist but not reliable for guaranteed monthly income scheme needs.
- Corporate Fixed Deposits: Higher rates (7.5-9%) than banks. Monthly interest available. Higher risk – check AAA ratings only. Not insured like bank deposits.
- NPS: Invest during working years. At 60, buy annuity with 40% corpus for monthly pension. Low charges. Tax benefits. Good best investment plan in India for retirement.
- Annuity Plans: Lump sum to insurance company. Get fixed monthly income for life. Safe and predictable. Inflation erodes value over time. Lower returns than other options.
Choosing the Right Monthly Income Scheme
Your choice depends on several factors that determine which is the best investment plan in India for your needs.
- Age: Senior citizens prefer SCSS or POMIS for complete safety. Young people can try SWPs with equity exposure for higher growth potential.
- Amount available: Small amounts under 10 lakh suit POMIS perfectly. Large amounts above 20 lakh can go into mix of multiple options for better diversification.
- Risk tolerance: Can’t handle market volatility? Stick to government-backed POMIS, SCSS, or fixed annuities. Comfortable with some fluctuation? Try debt fund SWPs for better returns.
- Tax situation: People in high tax brackets benefit significantly from debt mutual fund SWPs due to indexation benefits. Lower tax brackets can comfortably use POMIS or bank FDs without worrying too much about tax efficiency.
- Income flexibility: Need exact fixed amount every single month without fail? Choose bank FDs or annuities. Can handle some variation and withdraw flexibility? SWPs work better.
Combining Multiple Options
Smart investors don’t rely on a single monthly income scheme. They combine several for stability.
Example strategy for 20 lakh investment:
Put 5 lakh in POMIS for guaranteed safety and monthly income. Government backing eliminates all risk.
Invest 5 lakh in bank FD with monthly interest option for additional safe income stream.
Use 7 lakh for debt mutual fund SWP for tax-efficient income with slightly higher returns.
Keep 3 lakh in liquid funds for emergencies and unforeseen expenses.
This approach spreads risk across different instruments. Mixes completely safe options with moderate growth ones. Provides steady, reliable income from multiple sources working together.
Different best investment plan in India options complement each other better than putting everything in one scheme.
Tax Planning
Monthly income is taxable. Plan to minimise burden.
Interest from POMIS, FDs, SCSS fully taxable at slab rate. Debt fund SWPs more tax efficient – only capital gains taxed.
After 60, higher exemption limit helps. Use 80C deductions like SCSS. Invest in lower-bracket spouse’s name to split income.
Common Mistakes
Don’t chase very high returns in monthly income schemes. Higher returns mean higher risk.
Don’t put all money in one option. Diversify across different best investment plan in India choices.
Don’t ignore inflation. 5000 monthly today won’t have same value after 10 years.
Don’t forget emergency funds and tax implications.
Regular Review
Review your monthly income scheme portfolio yearly.
Check if payouts are consistent. Compare returns with current rates. Better options available?
Adjust for age. As you grow older, shift more to safe options. Rebalance if market changes altered portfolio mix.
Ensure income keeps pace with inflation.
Final Thoughts
Monthly income schemes serve important purpose. Regular income without working actively appeals to many.
Multiple options exist among best investment plan in India choices. POMIS for safety. SWPs for tax efficiency. SCSS for seniors. Annuities for guaranteed income.
Choose based on your age, risk tolerance, amount available, and income needs.
Don’t rely on single option. Combine multiple monthly income scheme choices for stability and growth.
Plan for taxes. Review regularly. Adjust as life changes.
Smart planning ensures steady income flow that supports your lifestyle without depleting your capital too quickly.
Start exploring options that fit your situation. Regular income is possible with right planning and choices.
Also read: How a Financial Planner Can Help You Plan with Confidence
