There are multiple Investment Options for Monthly Income in India that can help you to get stable income on monthly basis. Such income can help you to at least cover for you monthly living expenses after your retirement, or as a secondary source of income while you are working in a job or having a business.
Let us understand these Investment Options for Monthly Income in detail.
- 1. Post Office Monthly Income Scheme
- 2. Monthly Income Plan (MIP) in Mutual Funds
- 3. Systematic Withdrawal Plan (SWP)
- 4. Senior Citizen Saving Scheme
- 5. Government Bonds
- 6. Insurance Plans
- 7. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- 8. Stocks with High Dividends
1. Post Office Monthly Income Scheme
- Post Office Monthly Income Scheme or Post Office MIS is a fixed income scheme that gives regular payout every month on your deposits
- This is a Post office scheme for those looking for decent returns on their lump sum investment
- The tenure for Post Office MIS Scheme is 5 years, which means your money will be locked in for 5 years.
- You can deposit minimum of Rs. 1000 and maximum of Rs. 9 Lakh in Single account and Rs. 15 Lakh in joint account of this scheme
- The current interest rate in Post Office Monthly Income Scheme is 7.4% for October to December 2023 quarter
- This interest rate is reviewed by government of India every quarter
- The interest on which you open Post Office Monthly Income Scheme will be fixed throughout 5 years of your tenure
Post Office MIS scheme can be a good source of income for you on regular basis
ALSO READ: Latest Post Office Interest Rates
2. Monthly Income Plan (MIP) in Mutual Funds
- Monthly Income Plan or MIP is a type of mutual fund that provides you regular payments on monthly basis
- The fund usually invest in debt instruments and can belong to Debt Mutual Funds or Conservative Mutual Funds
- Major portion of assets are allocated to debt instruments to preserve your capital and provide interest income on regular basis
- Small portion of assets are also allocated to equities that provide dividends and also helps your money to grow
- Monthly Income Plan in Mutual Funds helps the retirees to have monthly income to cover their living expenses
- At times of bull market (increasing market), the income can be derived from interest on debt instruments and dividends from equities
- Another alternative to Monthly Income Plan is Systematic Withdrawal Plan (SWP), where the amount of monthly payouts depends on you, mentioned below in this article
ALSO READ: Retirement Planning Calculator in Excel
3. Systematic Withdrawal Plan (SWP)
- SWP full form is Systematic Withdrawal Plan. It is one of the best investment options for monthly income
- It helps you to get regular income from mutual fund, provided you have accumulated enough corpus in that mutual fund
- Similar to Post Office Monthly Income Scheme where you get fixed interest rate, the percentage of returns from mutual fund varies over time, but over long term you can get anywhere between 10% to 15% in good mutual funds
- You can also simply invest via SIP in Sensex to accumulate your target amount, and then systematically withdraw from this mutual fund after required corpus of amount is accumulated
- The amount you withdraw is taxable as per short term or long term capital gains
- If you are holding the mutual fund units for long term (LTCG), the profits made above Rs. 1 Lakh will be taxed at 10%
- Moreover, the regular income you earn from SWP can be used to cover your monthly expenses and hence you can retire from your salaried job and work for yourself for your own Life Goals
- SWP helps to retire early, provided you plan early in your life and start accumulating amount in a good mutual fund
Watch below Video on SWP Returns Calculation
Systematic Withdrawal Plan Calculation Video
4. Senior Citizen Saving Scheme
- SCSS or Senior Citizen Saving Scheme is for the senior citizens of India – Age 60 years or above
- It helps you get quarterly interest payout after every quarter based on the principal amount you deposit and interest rate
- The current interest rate in SCSS is 8.2% for the quarter October to December 2023
- So for example, you deposit Rs. 1 Lakh in SCSS, at 8.2% interest rate, you will get Rs. 2050 as quarterly interest payout
- SCSS tenure is 5 years, and you can extend it with a block of 3 years as well
- You get Income Tax Benefits under Section 80C with SCSS account – maximum Rs. 1.5 Lakh can be claimed in a financial year
- The interest rate provided in SCSS is highest compared to any other Post Office saving scheme
- SCSS is an effective and long-term saving option which offers security and added features that are usually associated with any government-sponsored savings
- Senior Citizen Saving scheme is available through certified banks and post offices across India
5. Government Bonds
- Government Bonds are one of the excellent Investment option for monthly income in India
- Various bonds offer monthly payouts based on your deposits and the tenure can range between 5 years to 40 years
- These bonds primarily invest your money in the growth of country, infrastructure and other government expenditures involving developments
- These are low risk investments and best suited for those who want to take low risk while getting the monthly payouts or coupon payments decided by Government at the same time
- The interest rates in these bonds can be between 7% to 8% annually
6. Insurance Plans
- Certain Life Insurance plans with savings option provides you the dual benefits of Insurance plus monthly Income
- One such plan is Traditional insurance plan which provides you regular payouts as maturity benefits
- These plans are designed to provide death and maturity benefits, where you pay premiums for few years initially and than reap the benefits of returns
- Another type of insurance plan is ULIP (Unit Linked Insurance Plan) that provide you returns related to markets
7. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Pradhan Mantri Vaya Vandana Yojana or PMVVY is an insurance policy-cum-pension scheme that provides regular payout to senior citizens
- Senior citizens of 60 years or above can invest in PMVVY from Rs. 1.5 lakh to Rs. 15 Lakh in order to get monthly pension from Rs. 1000 to Rs. 10,000 as regular payouts to cover for monthly expenses
- The scheme is administered by LIC (Life Insurance Corporation) of India for the Government of India
- PMVVY provides interest rate of 7.4% per annum
Retirement Planning Calculation with Inflation Video
8. Stocks with High Dividends
- Stocks with high dividends option is the risky option compared to other investment options seen above
- There are several Stocks or Equity Mutual Funds that can provide you dividends on regular basis
- If you know how company valuation can be done so that you can buy stocks at the price lower than their intrinsic value, you can select stocks to get dividends regularly
- It is important to note that not all stocks provide regular dividends so you need to choose stocks accordingly
So above are some of the Best Investment Options for monthly income that you can invest in to get regular payouts that can help you to cover you monthly living expenses.
If you are already retired, you can invest in couple of above investment options to get regular payments. And if you are a young investor, these options can help you to have a secondary source of income while you are working in a job or have a business.
Some more Reading
- SIP vs Lumpsum Investment Which is Better
- Retirement Planning Calculator in Excel
- New vs Old Tax Regime Which is Better
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