Which Investment Is Best For Monthly Income?
Posted: Dec 09, 2022
Unquestionably, the one thing we require is a monthly income. But if you have a sizable amount of extra money, investing it in programs that offer reliable monthly income is a fantastic choice. This ensures that your idle funds start to generate dividends or profits.
Factors to take into consideration when going for a monthly investment scheme
The below-mentioned factors are essential for a monthly investment scheme:
People should think about the state of the market before going for a monthly investment scheme.
When the interest rate is high, most seasoned investors prefer to invest in the Monthly Income Scheme because a higher interest rate results in a decline in net asset value.
Because there are so many monthly income plans available on the market today, people should take extra care before selecting a specific type of scheme.
People who want to invest in monthly income plans should first understand their own needs and requirements as investors.
As you conduct further research on the best monthly income scheme for 2022, you can compare their scope, offerings, and performance. This will allow you to better understand which type of scheme is best for them and how to make the most of it.
Some of the best investment plans for monthly income are mentioned below. Let’s take a look.
Senior Citizen Saving Scheme
A senior citizen savings plan (SCSP) is the best method for generating monthly income and a great option for investing. Only those who are senior citizens (over 60) are allowed to invest in it because it is backed by the government.
There are some banks and post offices that offer this service. You must enroll in the plan within one month of retiring. SCSP is providing a weekly interest rate of 7.4% per year. It is going to be in effect for five years. In the SCSS, you may invest up to Rs 15 lakh. On the other hand, the scheme's interest is added to your taxable income and is taxed at your marginal rate.
Corporate Deposits in the Post Office Monthly Income Scheme
Investments that offer monthly returns include India Post's Post Office Monthly Income Scheme (POMIS). For risk-averse people looking for dependable, regular income, it is a great investment choice because it is government-backed.
6.6 percent annual interest is currently paid on the POMIS in monthly installments. Deposit terms for this plan are five years. The maximum contribution per individual is Rs. 4,50,00, while the maximum contribution per joint account is Rs. 9,00,000. With as little as Rs. 1,500, this strategy can be launched. When your POMIS investment matures, you have an additional five years to reinvest it.
Corporate deposits are provided by a wide variety of non-banking financial institutions (NBFIs) and housing finance companies. Despite the fact that you invest through a business, these are less safe than bank deposits.
Compared to bank deposits, corporate deposits are more adaptable and offer higher interest rates. Before investing in corporate deposits, do your due diligence and research the NBFCs' financial standing and reputation.
Pradhan Mantri Vaya Vandana Yojana
This is a program designed specifically for senior citizens to provide them with financial security after they retire. It is the best monthly income investment plan in India.
It offers seniors a consistent income with fixed interest rates that range from 8% to 8.30% annually. Depending on the pensioner's choice of payment method, the annuity is paid on a monthly, quarterly, half-yearly, or annual basis at the conclusion of the policy term. It also has a policy term of 10 years.
Long-Term Government Bonds
Government bonds are an excellent low-risk investment option for risk-averse investors. The maturities of these bonds range from 5 to 40 years. The Indian government sets the coupon payments and the monthly interest rate on government bonds.
The maturity date of government bonds is fixed. The primary purpose of government bond issuance is to raise funds for government spending.
Monthly Income Plans
A mutual fund called a Monthly Income Plan invests primarily in fixed income and only a small portion of its assets in equity and equity-related securities. The best monthly income investment strategy is this one.
On a regular basis, the fund companies pay out a consistent income to their investors. This amount is not fixed and is determined by the performance of the fund. Because mutual fund performance drives the returns, they are not guaranteed. There is also the possibility of losing money.
As a result, you should consider your risk tolerance before opting for a monthly investment plan. Monthly income plans are divided into two types: growth and dividend. The MIP, on the other hand, declares dividends only when profits are made.
Equity Share Dividends
This option comes with the promise of a consistent income and long-term investment gains, but the risk is very high. You must create a diversified stock portfolio in order to achieve a high dividend payout ratio. Because dividends are only paid on profits, not capital, companies that do not pay regular dividends have a better chance than the average.
Annuity plans are offered by Indian insurance companies, and they offer a steady income with less risk. Retirement plans can involve investing a lump sum to produce income on a recurring basis.
Annuity plans can be either deferred or immediate annuities, depending on how long the payment period is. A deferred annuity pays out money after a predetermined fixed-tenor period, whereas an immediate annuity starts paying out regular income as soon as the lump sum payment is made.
But there are costs involved with buying annuities, like commissions and surrender fees. It provides no tax benefits and is also taxable.
It's not as difficult as you might think to locate the best investment strategies in India for monthly income. However, you should research the advantages and how they might benefit you before investing in any of these schemes. You must choose the strategy that will best help each person achieve their unique financial objectives.
WC Securities is one of the best service providers of mutual fund SIP. We have the best financial advisors in our financial planning company who can help you grow your wealth by investing in mutual funds.