Monthly income plan is a variety of mutual fund plan, that primarily invests primarily in equity securities with a necessary of generating money flows and saving capital. unit of measurement are best-suited for retirees who get a gentle income rather than capital gains. A monthly income plan, because the name suggests, may be a scheme where the individual receives a definite sum of money every month. This money typically accrues when a few years of payment of the premium. The name, monthly income plan, is additional of a mutual fund business formulation, and these types of plans are principally referred to as monthly guaranteed income plans, assured monthly income plans or monthly pension plans in the insurance field.
What are Investment Plans?
The process of matching the financial goals with your financial resources is termed as the Investment Plans. It is a core component of your financial planning which begins when you are all set from your mind to achieve your financial goals and objectives. The investment plans act as a guiding tool, helps you to choose the investment which can fit the needs, goals, standard of living also can be beneficial in the time of difficulties.
A good investment plan is the essential ingredient of a good investment program that provides liquidity and stable value, helps you in the growth of the capital value, it also provides tax implication and stability of purchasing power.
Earning income is the main objective of every investment. This income may be earned in the form of dividends, interest, or yield. There are many kinds of investment plans. In this article, we are going to discuss the investment plans which provide you the Monthly income in the form of monthly payouts.
Benefits of Investment Plan for Monthly Income
The benefits of investing in Monthly Income Plans are listed as under:
- It is the safer investment amongst all, as you can easily get your returns in the monthly payout which is comparatively at lower risks.
- It also provides you the minimum overhead as one does not need to pay any processing fees and if you exit, then the load charges will not exceed more than 1%.
- It also provides better returns as the returns provided to you in the form of monthly income are generally higher than the Fixed Deposit (FDs) schemes.
- Investment Plans for Monthly Income also provides liquidity.
Top 5 Investment Plans for Monthly Income
If you want to opt for investment plans for monthly income then, there are top 5 investment schemes that will surely help. The schemes are discussed below in detail. Let’s have a look at these plans.
Post Office Monthly Income Scheme (MIS)
The Post Office Monthly Income Scheme (MIS) runs under the Central Government of India. The minimum amount of investment in this scheme is Rs.1500 to the maximum amount of Rs.4,50,000 in total through single or multiple accounts. You can open this scheme as a joint account also. At present, the interest rate of this scheme is 7.6% which exists as your monthly payments. The maturity period of this scheme is 5 years. But, due to some conditions, if you want to withdraw money before its maturity period, in that case, you might have to pay a penalty on its premature withdrawal as 2% deduction within the time period of 3 years and 1% deduction within the time period of 3-5 years premature withdrawal. Post Office Monthly Income Scheme (MIS) provides fixed monthly income which is available at any branch of the post office. The person who is Resident, Individual or the guardian on the behalf of minor or person of unsound mind and a minor of 10 years or above age can open and operate this account. NRI (Non-Resident Indian) is not eligible to open an account in this scheme. This account can be open as a “Single or Joint Account” or one can convert his single account into the joint account as well.
The basic features of the Post Office Monthly Income Scheme (MIS) account are:
- Any number of accounts can be opened in this scheme.
- The nomination facility is also available in this scheme.
- The account can be transferred from one post office to another also.
- It is a risk-free investment.
Despite this, (MIS) investment doesn’t provide any loan facility and there is no information from the Post Department on the transfer of (MIS) account as a security is the drawback of this scheme.
Mutual Funds Systematic Withdrawal Plans (SWP)
This plan can be used to create regular income. It is a risky investment but there is a large number of choices in the funds like SIP, STP, SWQ & SWP Plan. If you choose the SWP Plan which is the Systematic Withdrawal Plan, you will get a “recurring revenue” on the same date every month from the interest generated on your funds in your account directly.
How Mutual Funds Systematic Withdrawal Plans helps in Taxation?
In Mutual Funds Systematic Withdrawal Plan, there are two types of taxes, Short-term Capital Gain & Long-term Capital Gain. If your investment is Rs.1 lac, and your withdrawal is within the time period of 1 year. Hence, it is called Long-term Capital Gain. But, if your investment is less than Rs.1 lac, then you don’t need to pay any such taxes on it. And if your investment is more than Rs.1 lac, then in short-term capital gain you must have to provide 15% and in long-term capital gain, you must have to provide 10% of capital gain. Fortunately, if one wants to take the advantage of monthly income from your fixed deposit then you must go for the long-term capital gain, as it provides a low tax interest rate of 10% only and no taxes to pay if your investment is less than Rs.1 lac per annum.
LIC Monthly Income
Life Insurance Company (LIC) is one of the trusted companies among all the investment companies in India. LIC provides a policy to their customers in the form of monthly income. It is a better option for those who seek monthly income as returns on their investment plan. This plan was somehow stopped due to some crisis but now, it has again started with all the new features. It is one of the best policies chosen by the customers to earn monthly profits as an income from their interest in the investment. The name of the policy is “Jeevan Akshay Neeti” The main feature of it is that it provides 10 different ways to choose as an option during the process of its investment. A person can choose the option according to its choice. One option from all is, “Equity Payable of Life at Uniform Date”. You can invest a minimum of Rs.1 lac to an unlimited amount for the policy. The age limit of this policy is 30-85 years. If one invests Rs.1 lac, 40 thousand rupees in this policy, then one can receive Rs.1900 as income per month. You can visit any branch of LIC to start your new investment plan, which can provide you a monthly income from your investment’s interest rate.
SBI Monthly Income Plan
The State Bank of India also provides a monthly income plan on investing money as a “Termed Deposit”. The account of Termed Deposit can be open at the age group of 10 years above to any age group. This account can be open as “Solo Account” or from the name of its “Minor” even “Joint Account”. The time period in this plan is a minimum of 7 days to a maximum of 10 years. This facility is available in every branch of the SBI Bank in India. The minimum amount of investment in the SBI Monthly Income Plan is Rs.1000 to the maximum unlimited amount. But, in the case of ‘Minor’ one has to deposit the sum of 2 lacs rupees only.
At present, the rate of interest providing in this plan is 7.2% which helps you to grow more and tax deduction is also provided in this plan. “Nominee” is also an option in this plan which also facilitates you to overdraft your investment as a loan. Suppose, if you invested the sum of 1 lac rupees in this plan and requested for the loan based on this investment, then usually the bank will offer you Rs.90,000 as the loan amount. It is such a great option in this plan which provides you 90% loan as well.
Despite this, the premature closure facility in this plan is also provided to you. The SBI Monthly Income Plan also provides you the facility to transfer your account to any other branches as well. Hence, this plan will be the regular monthly income and provides a lot of facilities.
ICICI Monthly Income Scheme
The ICICI Bank provides lots of investment plans in which the ICICI Monthly Income Plan is one of them which provides you Fixed Monthly Income on Fixed Deposit. You can generate monthly income on your FD in this scheme. The minimum amount of FD is Rs.1 lac in which the interest rate provided to you is 5.35% through which you can withdrawal Rs.3,628 on your Rs.1 lac FD. The minimum time period of this scheme is 2 years to unlimited. You will also provide Lump-sum after the date of its maturity as Rs.34,636 of total corpus on the Rs.1 lac FD which will increase its interest, monthly income, and total corpus as per the amount more than Rs.1 lac. Everyone who is the Indian Resident can apply for it. The rate of interest of the ICICI Monthly Income Scheme will remain constant from the date you started it to the time period of its maturity. It doesn’t change due to the change of any market value or from any other crisis. The nomination option is also available in this scheme with the transfer facility through which you can transfer your account to any other branch as well. This scheme provides you the better option of monthly income payout with the lump-sum amount option.
Frequently Asked Questions
Q1. What do you mean by Monthly Income Fixed Deposit Scheme?
Ans. The Monthly Income Fixed Deposit Scheme works on your Fixed Deposit (FD) investment. If you have a fixed deposit (FD) then you can choose your FD in the form of Monthly Income. There, the interest you earned on it will be received as your Monthly Payout. It will be transferred directly into your account monthly. You can receive this payout as the minimum FD interest rate. This may be the best ideal option for the Monthly income investment plan. This monthly scheme is for everyone. You can invest this type of FD for the total time period of 10 years from the Non-Banking financial sector as well as from the small banks also.
Q2. What are the main objectives of investment in Monthly Income Plans?
Ans. The objectives of investing in Monthly Income Plans are listed below:
- The main objective of this plan is to earn a steady stream of income.
- It helps you to keep your extra money safe.
- It also helps you to grow more.
- These plans also reduce the burden of the tax.
- This also helps you to achieve your financial goals and needs.
Q3. Explain the term Lump-sum in Monthly Income.
Ans. The meaning of lump-sum is the benefit at its maturity time. Many monthly income schemes also offer a lump-sum benefit at the end of their maturity period. This lump-sum benefit may be generally optional as it is provided in a few monthly schemes only.
Q4.Explain in brief about the Pradhanmantri Vaya Vandana Yojana.
Ans. The Pradhanmantri Vaya Vandana Yojana provides you a stable monthly income scheme. There is no age limit in this scheme. The annual rate of interest is 8 – 8.30% in this scheme. You have to put the amount as a lump sum of a minimum amount of Rs.1,50,000 to Rs.7,50,000. You can choose this scheme as a monthly payout, quarterly, half-year, or yearly as well.
Q5. Which is the best investment which also generates Monthly Income with low risks?
Ans. The Post Office Monthly Income Scheme (POMIS) is the best option which is risk-free for many investors who are seeking the regular payout as constant monthly income with an interest rate of 7.6% with a tenure of 5 years.