How To Get Monthly Income From Investment In India

Making a smart and planned investment schedule is of the utmost necessity for securing the financial future in a hassle-free manner. It helps to attain financial targets easily. Moreover, the money invested in variable schemes generate returns and secures the avenue for having a regular income flow.

Before settling for any particular investment option, it is very important to consider all the relevant pros and cons associated with it. There are a host of investment opportunities that are currently in circulation in the market which have been specifically crafted to fulfil certain particular types of financial requirements. While investing, it has to be made sure that the monthly necessities are accurately met with relevant monthly income flow along with wealth corpus enhancement to fulfil the long-term goals.

Investments with Monthly Income Benefits

• Mutual Funds with Monthly Income Plans (MIPs)

Here, the investment is principally done in debt instruments with slight exposure in equity. The accumulated interest is periodically distributed among the investors. When compared to equity investment schemes, the monthly income plans are supposed to be comparatively less risky and are ideal for the investors who are seeking monthly income flow and want a short-term fund accumulation.

• Post Office MIS

This is an ideal investment instrument for investors seeking fixed, regular monthly income flow supported by guaranteed returns. The rate of interest is declared by the Post office every year and is fixed for the entire duration of 5 years. There is a procedure of premature withdrawal in case the depositor expires. A maximum of INR 4.5 lakhs can be invested in a Post office Monthly Income Scheme or PO MIS for a tenure of 5 years at the mentioned guaranteed rate.

•  Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Specially designed for senior citizens, PMVVY offers a stable monthly income flow based on a rate of 7.4% p.a. The policy term is 10 years. The annuity is paid on monthly, quarterly, half-yearly or annually as the policy term ends, abiding by the choice of the payment mode selected by the investor. 
A minimum amount of INR 1,56,658 needs to be paid to avail an annuity of INR 12,000 per annum.

• Post Office Senior Citizen Savings Scheme (SCSS)

Designed for senior citizens, this scheme can also be availed by the individuals of 55 years of age, provided they have applied for voluntary retirement or superannuation option. The current rate of interest in SCSS is 7.4%, payable at the end of each quarter. The minimum investment amount is INR 1,000 while the optimum limit is INR 15 lakh. Moreover, the investments under this scheme are eligible for tax deduction under Section 80C of the Income Tax Act.

•  Dividend-paying Stocks

This is a great investment tool for generating monthly income. However, before investing under this scheme, careful homework and background check is essential if the company has paid regular dividends in the past.

•  NBFC Fixed Deposits

The FDs are offered by banks, NBFCs, post offices and companies. The FDs of the companies and NBFCs offer a higher rate of interest. The interests are generally provided by the companies either on a quarterly or half-yearly basis. Moreover, the rates get enhanced by up to 0.25%-0.50% for senior citizens. But, one thing must be kept in mind that there runs a slight risk of delay or default of payment. To cover this ground, the investor needs to ensure that the chosen company has secured a consistent AAA rating from ICRA or CRISIL.

• Corporate Deposits 

There are innumerable non-banking financial institutions or NBFCs and Housing Finance Companies or HFCs that offer corporate deposits. These investments are like bank deposits but offer less security. The corporate deposits offer high rates of interest with added flexibility benefits compared to bank deposits. the financial strength and the credibility of the NBFC or HFC must be ascertained before choosing for investing.

• Equity Share Dividend 

This investment option allows long-term investment gains along with a monthly income facility. But the risk factor is significantly high in this respect. A considerably diverse portfolio involving several stocks is essential for facilitating a high dividend payout ratio. 

• Annuity 

Most of the insurance companies in the country offer annuity schemes with low risk and regular income flow. This can be utilised as a retirement strategy. The deferred annuity plans provide money after a fixed term set by the investor has elapsed while immediate annuity offers immediate payout as soon as the lump-sum payment is done. However, there are several charges to be paid under this scheme.

• Long-term Government Bond 

This is another low-risk investment option with once or twice a year interest payout. It can collaborate with other investment options and interest earned throughout the year. The investor is free to sell these as and when they wish as these are traded in the secondary market. However, the lock-in period can range from 15 to 20 years.

Importance of Monthly Income-generating Schemes

Before settling for any investment option, all the associated pros and cons must be carefully studied in respect of the financial targets, risk appetite and the overall asset value. The monthly income-generating schemes are ideal for senior citizen investors and those who have retired. This sort of scheme ascertains the regular monthly income flow fulfilling the short-term goals.

Earn Monthly Income from Your Investments

Although different individuals have different financial goals, needs and targets; securing monthly income flow is probably common for all. Therefore, after careful consideration of the relevant factors for wealth creation, financial security, and tax planning are essential in this respect to make the right choice and reap the optimum benefits.