Different possibilities are available in investment plans, allowing consumers to significantly improve their income. Before spending money, however, one should give them a closer look. Anyone seeking a guaranteed income should look for programmes with no or little risks. This, in turn, opens up opportunities to considerably reduce losses and other issues, ensuring mental tranquilly. Not only that, but choosing the finest programmes allow a person to concentrate on his or her financial objectives, which will assist in the resolution of difficulties.
What is a Monthly Income Scheme?
A monthly income plan is a type of investment in which an investor invests a certain amount and receives returns on that investment on a regular basis. Monthly income schemes include monthly income fixed deposits, SCSS, POMIS, and SWP mutual funds. All of these investment alternatives have one thing in common: a recurring income stream. The risk features, terms, and conditions of each investment vary. These programmes are either government-backed or administered by a third-party fund manager. In any case, investing in such programmes is incredibly straightforward.
7 Best Monthly Income Schemes in India for 2022
- Fixed Deposit (FD)
- Post Office Monthly Income Scheme (POMIS)
- Senior Citizen Savings Scheme (SCSS)
- SWP from Mutual Funds
- Government Bonds
- LIC Monthly Income Plans
- Corporate Deposits
1. Fixed Deposit (FD)
A Fixed Deposit is low-risk income schemes that can enable Indian consumers earn large returns. This programme allows you to invest a set amount of money for a set length of time in order to get a higher rate of return. Simultaneously, the rate of interest will be determined by a number of factors, all of which investors should be aware of. Fixed deposit rates at most banks range from 8% to 9%, indicating that they are high-income options. In India, the minimum deposit amount varies by bank. Depositors might make a nomination to benefit their relatives when they pass away.
- The rate of interest is lower than a standard fixed deposit. This sort of FD offers a reduced rate of interest.
- The minimum deposit amount varies by bank, however it is usually Rs 10,000.
- It is possible to nominate someone.
- Income tax is levied at regular slab rates on ‘Income from Other Sources’.
- There is a penalty for premature withdrawal.
- The effective interest earned is lower than a typical fixed deposit due to the monthly payment of interest income, even though the investment amount, duration, and interest rate are kept constant.
2. Post Office Monthly Income Scheme (POMIS)
In India, post offices provide a monthly income plan. It’s a great alternative for individuals who want to invest with no risk. Depositors may currently earn approximately 6.6 percent interest on their money, with a maximum investment of 15 lakhs and a minimum investment of Rs 1500. The post office MIS interest rate, on the other hand, might fluctuate from year to year, so depositors should be aware of it before investing. In addition, the plan includes a 5-year lock-in term, and the money cannot be taken out right away. Customers can even choose a beneficiary in the event of their death.
It’s feasible to move your account from one post office to another. Depositors can utilise the post office monthly income plan calculator online to create an account at the same time. Customers can also create a joint account that is tailored to their needs. One year after the first deposit, depositors are unable to make a premature withdrawal.
3. Senior Citizen Savings Scheme (SCSS)
A senior citizen savings plan is a government programme run by a post office that offers a variety of incentives to older citizens. It allows older folks to contribute as little as Rs. 1000 and as much as Rs. 15 lakhs. Senior folks can also create a savings account in either a public or private bank, depending on their preferences. SCSS is one of India’s greatest investment possibilities for generating higher profits. Aside from that, it enables a person to plan for financial security after retirement. It has a 5-year term, which a policyholder can extend after the maturity period.
Anyone over the age of 60 can establish a savings account at a bank or post office to help them plan for life after retirement. Under the Income Tax Act, the system even allows for income tax deductions. These are the greatest monthly programmes on the market, which you may choose from based on your needs.
- The interest rate will be 7.40 % beginning April 1, 2020. In the first instance, interest is payable from the deposit date of 31st March/30th September/31st December, and subsequently, interest is payable on 31st March, 30th June, 30th September, and 31st December.
- The minimum deposit is Rs 1,000, and the maximum amount an investor may put in multiples of Rs 1,000 is Rs 15 lakh.
- The account can be opened by a resident senior citizen over the age of 60. A senior citizen can create an account in his or her own name or jointly with his or her spouse.
- The deposit amount is eligible for an income tax deduction under section 80C of the Income Tax Act of 1961.
- After you’ve opened your account, you can close it at any moment. If you pay off the loan before the year is out, you won’t have to pay any interest. Furthermore, even if interest is paid and deposited to the account, the principal amount will be repossessed.
4. SWP from Mutual Funds
Mutual fund participants might benefit from a systematic withdrawal plan (SWP) given by the company. It explains how to earn a consistent monthly income from mutual funds, as well as how to produce a large amount of money. The monthly income plan of mutual funds allows investors to receive steady monthly income. Customers should, however, familiarise themselves with the terms and conditions before purchasing. They can calculate the future value and total returns with the help of a calculator.
Mutual funds, as you are probably aware, are quite popular in India, particularly among millennials. In addition, a Systematic Withdrawal Plan (SWP) is a great approach to secure a consistent monthly income from mutual funds. You can set a monthly payment amount for your investment in this plan. As a result, units equal to that amount would be redeemed every month on a specific day. Unlike dividends, which are based on fund earnings, this plan ensures a consistent income.
5. Government Bonds
The Government of India is the most common issuer of government bonds, with maturities ranging from five to forty years. It gives investors consistent interest rates, demonstrating how to build a steady stream of income. Treasury bills, cash management bills, floating-rate bonds, fixed bonds, zero-coupon bonds, and other government bonds are examples of government bonds. Customers can purchase and sell government bonds in the same way that they can buy and sell stock.
A long-term government bond is, as its name indicates, a financial instrument issued by the federal government and/or state governments. The goal is to fund the country’s economic and financial demands while also controlling money supply. The Reserve Bank of India is in charge of overseeing the sale of these bonds. The bonds are available for 5 to 40 years in length. The G-Sec interest rate is a coupon rate or yield is a phrase used to describe the rate at which long-term bonds are sold.
6. LIC Monthly Income Plans
Individuals and older adults can now benefit from monthly income plans offered by LIC, the country’s largest public insurance business. Investors may deposit a lump sum amount as little as Rs.1.5 lakhs in the Jeevan Akshay VI monthly plan, which is one of the top LIC monthly plans. It’s a retirement plan for seniors who wish to have a steady income when they retire. The kind and form of payment for an insurance should be chosen from a variety of possibilities. Furthermore, some life insurance plans include investing alternatives that allow consumers to generate substantial returns and income.
7. Corporate Deposits
Corporate deposits or firm deposits are offered by Non-Banking Financial Institutions (NBFI) in India. The interest rate is higher than what banks provide on their ordinary fixed deposits. The liquidity of corporate deposits is excellent. According on the agreement between the investor and the NBFC, interest is paid quarterly or half-yearly. The interest rate on a corporate deposit is fixed and guaranteed, similar to that of fixed deposits with banks. Furthermore, older individuals pay a higher interest rate than the general public.
Before investing, however, be sure to examine the NBFC’s credit rating from ICRA and CRISIL. You need to put your money into firms that have a good track record. In addition, the DICGC does not cover corporate deposits.
Why should you invest in a Monthly Income Scheme?
For someone with a restricted source of income or limited capacity to work, a consistent income is critical. A senior individual wishing to retire, for example, should choose a monthly income scheme to maintain his or her level of life while still covering his or her costs. This substantial cash can be protected for emergencies with a lump sum investment. The recurring income from such a lump sum amount, on the other hand, will aid in meeting regular costs.
A tax deduction under section 80C of the Income Tax Act, 1961 is also available for monthly income plans. Amounts up to Rs 1.5 lakhs are eligible for a tax deduction. Senior citizens savings plans and long-term government bonds are eligible for a tax deduction.