Written by
Updated :
Reviewed by
What Is Monthly Income Scheme?
A monthly income scheme is a scheme where you invest a certain amount of money every month and earn interest on it every month as well. This means that you earn the returns in the form of periodic payments.
Top Monthly Income Scheme Options
Following is a list of top monthly scheme, which you can opt for:
- Post Office Monthly Income Scheme
- Corporate Deposits
- Senior Citizen Savings Scheme
- Monthly Income Plans
Let us understand the top monthly income schemes in detail below:
1. Post Office Monthly Income Scheme
Post Office Monthly Income Scheme is suitable for investors who are risk-averse and want a continuous income. The post office monthly income scheme has a deposit period of 5 years and comes with an interest rate of 6.60% from 1st April, 2020. [1] This rate is subject to change without prior information. In a Post Office Monthly Income Scheme, you can start with an initial deposit as low as Rs.1500. All Indian Residents are eligible to apply for Post Office Monthly Income Scheme. You can open POMIS account in your child’s name as well provided he/she is 10 years old or more.
Features of Post Office Monthly Income Scheme:
- Low Risk Investment
- Initial Deposit as low as Rs.1500
- Guaranteed Returns
- Reinvestment Facility
- Nomination Facility Available
2. Fixed Deposits with Monthly Payout
Banks and financial institutions provide Fixed Deposit with monthly payout option. Such a monthly income scheme allows you to enjoy added flexibility of monthly payout. You may diversify your funds in various banks and high-ranking companies for making the most of your monthly income scheme. Fixed Deposits with monthly payout option is recommended for pensioners or senior citizens as the interest earned monthly can be another source of income for them.
Features of Fixed Deposits:
- Fixed Returns
- Regular payouts
- Low Risk on Investment
- Partial Withdrawal Allowed
- Loan against Fixed Deposits
Also Read: Fixed Deposit for your Child’s Future
Senior Citizen Savings Scheme
Senior Citizen Savings Scheme is for senior citizens of 60 years of age or above. This scheme can help them earn high returns with low risk involved. Senior citizens can invest in this scheme by visiting certified banks and post offices across the country. In this scheme, you can invest the money received as the retirement benefit. The maximum limit of investment under Senior Citizen Savings Scheme is Rs.15 lakh [2]. You can invest Rs.15 lakh or the amount received on your retirement, whichever is lower.
Senior Citizen Savings Scheme
Senior Citizen Savings Scheme is for senior citizens of 60 years of age or above. This scheme can help them earn high returns with low risk involved. Senior citizens can invest in this scheme by visiting certified banks and post offices across the country. In this scheme, you can invest the money received as the retirement benefit. The maximum limit of investment under Senior Citizen Savings Scheme is Rs.15 lakh [2]. You can invest Rs.15 lakh or the amount received on your retirement, whichever is lower.
Features of Senior Citizen Savings Scheme:
- Invest upto Rs.15 lakh
- Safe Investment Option (Backed by Indian Government)
- Tax benefit under Section 80C
- Nomination Facility Available
- Apply from any authorized bank or post office
Monthly Income Plan (MIP)
A Monthly Income Plan (MIP) is an alternative to Post Office Monthly Income Scheme and fixed deposits with monthly payout option. MIP is a monthly income mutual fund plan where a company provides investors and shareholders with a certain sum of money monthly on the basis of fund’s performance. MIP is debt oriented and generally categorized under the hybrid mutual fund. Unlike other monthly income schemes, this monthly income plan is moderately risk scheme and does not generate a fixed monthly income.
Monthly Income Plan (MIP)
A Monthly Income Plan (MIP) is an alternative to Post Office Monthly Income Scheme and fixed deposits with monthly payout option. MIP is a monthly income mutual fund plan where a company provides investors and shareholders with a certain sum of money monthly on the basis of fund’s performance. MIP is debt oriented and generally categorized under the hybrid mutual fund. Unlike other monthly income schemes, this monthly income plan is moderately risk scheme and does not generate a fixed monthly income.
Features of Monthly Income Plan (MIP):
- Debt Oriented (Hybrid Mutual Fund)
- Moderate Risk Involved
- Earn Dividends (in case of profits)
- No Entry Load
- No Lock-in Period
Also Read: Types of Investments in India
Why Should You Go for a Monthly Income Scheme?
When you wish to secure your family’s financial future, you look out for various options for building the optimum portfolio. Adding a monthly income scheme plan to your portfolio offers you and your loved ones the assurance that they will enjoy security for a long time in the unseen future.
The benefits offered by a monthly income scheme plan are as follows:
1. Regular Income
A monthly income scheme for any family will be of great significance, as it provides a steady inflow of money. In the absence of the breadwinner, or monthly salary after retirement, such monthly payouts can offer support in meeting with recurring expenses and maintaining a standard of living.
Receiving payouts at fixed intervals provides a sense of financial stability over time. The lump-sum money, on the other hand, may help in offering immediate assistance. Still, it may get used up quickly, which may leave financial security in the future to be uncertain again.
In this way, the monthly income scheme can ensure that your family continues to enjoy financial freedom without depending on others.
2. Tax Benefits
You invest in monthly income scheme plans mainly to secure your family’s future for a time when you may not have regular income after retirement or in your absence. However, some of the monthly income scheme plans also provide you with significant tax benefits both in the present and future.
For instance, you can enjoy tax benefits if you invest in Senior Citizen Savings Scheme. You can avail tax deduction benefits of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. Such tax benefits on a monthly income scheme can minimize your tax liability significantly while keeping your family secure for the unseen future.
Also Read: What is Financial Planning?
Invest in the Right Monthly Income Scheme
A monthly income scheme is a smart way to enjoy financial stability and security. Depending on the family’s needs and your life goals, you may choose to opt for a monthly income plan or scheme.
Whichever monthly income scheme you want, it is crucial to create a holistic portfolio where your security and wealth generation needs are well-balanced. To plan more decisively, start by assessing your monthly income scheme needs and then invest. Choosing the best monthly income scheme will provide several befits to your family.
Sources:
[1] https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
[2] https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
ARN: Sep/Bg/28V
