InvestorQ : What are some of the best Fixed Monthly Income Instruments in India?
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What are some of the best Fixed Monthly Income Instruments in India?

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Nishita Gala answered.
1 year ago


There are different type of investors- some who are okay with taking extreme risk in order to get stupendous gains as well as those who want to play it safe and get a steady regular income.

This question is pertinent to the latter group of investors.

Here are some of the best investment options that can give investors a regular monthly income

1. Post Office MIS (POMIS) The Post Office Monthly Income Scheme is a post office deposit which attracts interest rate of 7.70%. There is a maximum investment limit of Rs.4.50 lakhs in an individual account and Rs.9.00 lakhs in a joint account. In case of multiple POMIS accounts, the collective limit for all the accounts put together will be Rs.4.50 lakhs. The scheme is suited to retirees who are dependent on regular income since the interest is credited to your account each month. The POMIS can be cashed prematurely after 1 year by paying a charge of 2% and after 3 years by paying a charge of 1% of the withdrawn amount. There was a 5% bonus payable on POMIS accounts on maturity but this bonus has been scrapped effectively December 2011 and is not payable any longer. 2. Fixed Deposit (FD)

One of the safest investment tool available for investors, the fixed deposit is a low-risk financial instrument. In this investment option, you have to park your funds for a fixed amount of time for which tenure you get an interest (at a predefined rate of interest).

In fact, FDs are some of the most popular investment options available in the market. Depending on the tenure selected, you can opt for monthly, quarterly as well as yearly returns. Banks offer FDs as do corporates as well and the latter usually offer higher returns, but their investment may or may not be secured.

3. Senior citizen saving scheme (SCSS)

As the name suggests, SCSS is a special scheme only for senior citizens and hence, investment in this scheme can be made only by people of 60 years of age or above.

The SCSS has a maturity of five years, which is extendable by three years. Rate of return offered in this scheme is 9% per annum. Interest income will be paid every three months.

4. Mutual funds’ monthly income plan (MIP)

Mutual funds offer the facility of regular income, also called MIP (monthly income plans). The amount paid via MIP is called dividends.

5. Systematic Withdrawal Plan (SWP) from mutual funds

SWP is the reverse of Systematic Investment Plan (SIP), wherein a fixed number of mutual fund units are withdrawn and sold in the market. This is a slightly risky way to generate monthly income and not advisable for those who are looking for fix returns.