10 Best Investments to get regular monthly income (India)

Sometimes, planning for your future finances can be overwhelmingly intimidating as well as confusing. When you happen to have a fairly large amount of cash at hand but no fixed regular/monthly income, you obviously want to invest your money in the smartest and the most profitable way possible.

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Below we have discussed 10 of the best investment options for you that will garner you a steady flow of regular income while keeping your capital comparatively safer. Take a look.

1. Bank Fixed Deposits

Bank Fixed Deposits are a risk-free way to earn regular monthly incomes and are suitable for you if you’re not comfortable with stock market investments. Bank FDs offer better returns than savings accounts. The interest rates on fixed deposits vary depending on the amount of investment, the tenure, and bank policies, however, one can expect to earn up to 6%- 9% from fixed deposits in general.

Income from fixed deposits is taxable under ‘Income from other sources’.

2. Post Office MIS

The Post Office Monthly Income Scheme is offered by the Department of Post, India. In this scheme, a person can invest up to 4.5 lakhs on a Single account or up to 9 lakhs on a Joint account. The annual interest rate is 7.3% and the interest is paid monthly to the investor. Like bank FDs, POMIS is also a risk-free investment. MIS schemes have a maturity period of 5 years while you can withdraw prematurely after the completion of 1 year with a 2% deduction.

Income from MIS schemes is taxable under ‘Income from other sources’.

3. Senior Citizen Savings Scheme

Another risk-free option, the Senior Citizen Savings Scheme is offered by the Indian Post Office for people over 60 years of age. However, people who opted for VRS and are older than 55 years, or defense personnel who are retired and older than 50 years are also eligible for this scheme. In this scheme, an annual interest of 9% is offered and is paid every 3 months. The scheme has a maturity period of 5 years.

Income from the Senior Citizen Savings Scheme is tax-exempted up to 50000 per annum.

4. Pradhan Mantri Vaya Vandana Yojana

The PMVVY is a relatively new scheme that came into existence since July 2017. This scheme, designed as a pension scheme for senior citizens, offers a guaranteed interest rate of 8% per annum. The limit of investment amount was 7.5 lakhs initially, but after the Budget 2018, it is proposed to be increased to 15 lakhs. The interest amount is paid monthly/quarterly/half-yearly/yearly as chosen by the investor and the maturity period is 10 years.

5. Long term government bond

Unlike the schemes mentioned till now, this option is not a risk-free one, although the risk factors are relatively lower than other investment options. In long-term government bonds, you will get paid the interest amount only yearly though, or in some cases half-yearly. As the name suggests, you’ll have to invest your money long-term, i.e. for 10-20 years, to gain good returns. You can withdraw before the maturity period by paying a penalty.

6. Debt mutual funds with dividend options

Like government bonds, debt funds are also low-risk options of investment, but not risk-free. The interest rate keeps changing from 6% to 10%, depending on the market. Though they do not offer monthly income, still, they can be a good source of regular income in the form of dividends. They are also tax-free, so people in the higher tax brackets can be benefitted from these types of investments.

7. Annuity

Annuity is one of the best investment plans for retired individuals. In annuity, an investor invests a lump sum amount and then earns income in a specified period of time regularly. Annuity plans offered by insurance companies offer good returns with low risks.

Annuity plans offer no tax benefits and any income generated from annuity plans are taxable.

8. Monthly Income Plan of Mutual Funds

MIP mutual funds are suitable for people with medium risk bearability. In these types of mutual funds, regular income is generated from dividends. Your money is generally invested in a 30%- 70% ratio between equities and debts. As most of the sum is invested in debt instruments, it lowers the risk factors as much as possible. Investors can expect 20% or more returns from MIP mutual funds, which is subject to fluctuations depending on market conditions. The maturity period is 2-3 years in general. You must opt for the dividend payout option if you want a regular monthly income out of the MIP mutual funds.

MIP is one of the best investment plans in terms of returns, but the risk factor is also higher when compared to other monthly income plans mentioned in this list till now.

Returns earned from Monthly Income Plans of Mutual Funds are tax-exempted.

9. SWP with Mutual Funds

Systematic Withdrawal Plans of Mutual Funds is another great option for generating a regular income. In SIP or Systematic Investment Plan, you have to invest a fixed amount on a fixed date every month, and in case of SWP, the opposite happens, meaning you will get to withdraw a fixed sum of money on a fixed date every month. You can choose any option of regular withdrawal, be it monthly, quarterly, half-yearly, or yearly. You can either choose to withdraw a fixed amount deducted from your investment capital, or only capital gains earned. By selecting the second option, your lump sum amount will remain invested for a long time, and if you select the first option, then you can use the fixed withdrawal amount as per your needs.

Systematic Withdrawal Plans are taxable under ‘Income from other sources’.

10. Rent from Real Estate

You can invest your money in real estate, buy a house or apartment, and rent it. Rents increase by 10% every year, so your regular income will keep coming and keep increasing, while the capital amount in the form of the house or apartment will remain invested. However, you should note that the value of a house of apartment depreciates with time.

Income from rents is taxable.

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