How We Work
- Learn what a monthly income scheme is
- Know the factors to consider in before investing in MIPs
- Find out the benefits of monthly income plans
Best Investment Plan for Monthly Income in 2024
Chahat Awasthi,Aashika Jain
Contributor,Editor
Editorial Note: This content has been independently collected by the Forbes Advisor team and is offered on a non-advised basis. This content is not part of the comparison service provided by RunPath Regulatory Services. Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.
Monthly income plans provide investors with a regular income stream, generating a stable cash flow, while offering potential for capital appreciation. Several banks, insurance companies and financial institutions offer these schemes and plans. Often retirees and individuals seeking supplemental income or a regular payout get attracted to these schemes.
But what are these schemes, how are they graded on a risk-o-meter, and which are the best bets available in India? We give a lowdown below.
{{ showMobileIntroSection ? 'Read Less': 'Read More' }}
{{ showSummarySection ? hideSummaryText : showSummaryText }}
- Top Investment Plans for Monthly Income
- Best Investment Plans for Monthly Income
- ULIP (Unit Linked Insurance Plan)
- Annuity Plans
- Systematic Withdrawal Plans
- National Savings Monthly Income Scheme (Post Office)
- Mutual Fund Monthly Income Plans (MIPs)
- Senior Citizen Saving Scheme
- Long-term government bonds
- Methodology
- Summary of best investment plans for monthly income
- What is a monthly income scheme?
- Things to Factor in Before Investing in MIPs
- Benefits of Monthly Income Plans
- Bottom Line
Top Investment Plans for Monthly Income
- ULIP Plans
- Annuity Plans
- Systematic Withdrawal Plans
- Post Office Monthly Income Scheme
- Mutual Fund Monthly Income Plans
- Senior Citizen Saving Scheme
- Long-term government bonds
Best Investment Plans for Monthly Income
FEATURED PARTNER OFFER
ULIP (Unit Linked Insurance Plan)
Rate of Returns
9% to 12% pa
Tax Benefits
Section 80C and Section 10(10D) of the IT Act, 1961
Risk Grade
Medium to High
Rate of Returns
9% to 12% pa
Tax Benefits
Section 80C and Section 10(10D) of the IT Act, 1961
Risk Grade
Medium to High
Why We Picked It
ULIPs provide the advantage of life insurance coverage and investment benefits, all combined into one package. Most ULIPs are customizable and provide a sturdy rate of return. Investors have the flexibility to choose funds, policy duration, and premium amount, aligning their investments with financial goals and risk appetite.
ULIPs, or Unit-Linked Insurance Plans, provide bonuses and loyalty rewards as an additional benefit to help increase your wealth over time. Post lock-in period, partial withdrawals are allowed, giving liquidity for unforeseen circ*mstances. The lock-in period is five years.
You also get the option to switch funds which can help maximise returns.
FEATURED PARTNER OFFER
Annuity Plans
Rate of Returns
7% to 10%
Tax Benefits
Section 80CCC and Section 10(10D) of the IT Act, 1961
Risk Grade
Low to Medium
Rate of Returns
7% to 10%
Tax Benefits
Section 80CCC and Section 10(10D) of the IT Act, 1961
Risk Grade
Low to Medium
Why We Picked It
Annuities offer a guaranteed monthly payout and can also serve the purpose of a pension. They provide long-term financial security.
The plans allow for flexibility in terms of payout options – fixed-term, lifetime or joint-life. Additionally, if the investor passes away, the nominee gets the death benefits, ensuring financial security for the family.
Besides, there aren’t any market risks involved as annuities are not market-linked instruments. The returns are guaranteed throughout the payout period.
FEATURED PARTNER OFFER
Systematic Withdrawal Plans
Rate of Returns
7% to 13%
Tax Benefits
Depends on the plan
Risk Grade
Medium to High
Rate of Returns
7% to 13%
Tax Benefits
Depends on the plan
Risk Grade
Medium to High
Why We Picked It
SWPs provide flexibility in terms of withdrawal amount and allow you to select the frequency of withdrawal as well. The frequency of the payment can be either monthly, quarterly, half-yearly, or yearly. Additionally, most plans allow for long-term growth by structuring both principal and capital appreciation together.
It’s worth noting here that investment options like mutual funds, ULIPs and other schemes can be used to avail SWPs. These are managed by experts and provide investors with the flexibility to stop or adjust withdrawals as per evolving needs.
Besides, depending on the holding period and choice of investment instrument, SWps can provide tax benefits. These can include tax-free dividends or long-term capital gains.
FEATURED PARTNER OFFER
National Savings Monthly Income Scheme (Post Office)
Rate of Returns
7.4% pa
Tax Benefits
Nil
Risk Grade
Nil to Low
Tax Benefits
Nil
Risk Grade
Nil to Low
Why We Picked It
This low-risk scheme is backed by the government of India and is accessible at all post offices in the country. The scheme does not deduct tax at source and allows you to nominate beneficiaries to receive the invested amount in the event of an investor’s demise. It’s worth noting here that interest earned from this scheme is taxable according to your income tax slab.
Moreover, the post office MIS offers a guaranteed monthly income, which is also fixed. The scheme has a fixed tenure of five years, but premature withdrawal is allowed after a year. However, it’s important to keep in mind that withdrawing early may result in penalties.
FEATURED PARTNER OFFER
Mutual Fund Monthly Income Plans (MIPs)
Rate of Returns
8% to 15%
Tax Benefits
Section 80C of the IT Act, 1961 (ELSS investments)
Risk Grade
Medium
Rate of Returns
8% to 15%
Tax Benefits
Section 80C of the IT Act, 1961 (ELSS investments)
Risk Grade
Medium
Why We Picked It
MIPs provide a steady monthly income through dividends. They invest in a combination of debt and equity instruments to balance income and capital appreciation. They have a moderate risk profile and offer regular dividends on a monthly, quarterly, or annual basis.
Some also offer a systematic withdrawal plan. Fund managers make investment decisions, and you can buy or sell based on your goals and needs. However, MIPs have an expense ratio to consider when evaluating returns.
FEATURED PARTNER OFFER
Senior Citizen Saving Scheme
Rate of Returns
8.2% pa
Tax Benefits
Section 80C of the IT Act, 1961
Risk Grade
Nil
Rate of Returns
8.2% pa
Tax Benefits
Section 80C of the IT Act, 1961
Risk Grade
Nil
Why We Picked It
The Senior Citizen Savings Scheme (SCSS) is a government-backed investment scheme that caters specifically to the financial needs of Indian senior citizens aged 60 years and above. With its attractive interest rates and flexible investment options, the SCSS provides a secure and reliable platform for senior citizens to grow their savings and secure their future.
Senior citizens can invest up to INR 30 lakh for a fixed tenure of five years, which can be extended for an additional three years. The interest rate is currently 8.2% p.a. and the scheme provides steady monthly income.
Withdrawals before one year incur penalties. Interest earned is taxable based on the income tax slab. The SCSS is considered a low-risk investment option. It is available at designated banks and post offices across India.
FEATURED PARTNER OFFER
Long-term government bonds
Rate of Returns
6% to 9%
Tax Benefits
Section 80 10(10D) and Section 80CCF of the IT Act, 1961
Risk Grade
Low
Rate of Returns
6% to 9%
Tax Benefits
Section 80 10(10D) and Section 80CCF of the IT Act, 1961
Risk Grade
Low
Why We Picked It
Long-term government bonds offer fixed interest payments and a fixed coupon rate for ten years or more. They are actively traded in financial markets and backed by the issuing government’s full faith and credit. They are preferred by investors seeking stable, long-term income and capital preservation.
Methodology
Several factors are considered while preparing the list. Some of the primary factors considered are risk grade and returns, investment horizon and variability in choice (types of investments). Other factors considered include the minimum investment period, investment limits, and unique selling points of each investment instrument.
Summary of best investment plans for monthly income
| Scheme/Plan | Risk | Minimum Period of Investment | Investment Amount (INR) | Learn More CTA text | Learn more CTA below text | LEARN MORE |
|---|---|---|---|---|---|---|
| ULIPs | Medium to High | 5 years | 1,000-no limit | View More | ||
| Annuity Plans | Low to Medium | Varies | Usually, 10,000-no limit | View More | ||
| Systematic Withdrawal Plans | Medium to High | 5-40 years | Usually, 500-no limit | View More | ||
| Post Office Monthly Income Scheme | Nil to Low | 5 years | Single Life: INR 1,000 to 9 lakh Joint Life: 1,000 to 15 lakh | View More | ||
| Mutual Fund Monthly Income Plans | Medium | 3 years | 500-no limit | View More | ||
| Senior Citizen Saving Scheme | Nil | 5 years but extendable by 3 years | 1,000 – 30 lakh | View More | ||
| Long-term government bonds | Low | 10 years+ | 10,000-no limit | View More |
What is a monthly income scheme?
A monthly income scheme involves investing a fixed amount of money every month and earning interest on it every month. It is considered a smart way to ensure financial stability and security for your family.
Things to Factor in Before Investing in MIPs
We have always maintained that investments need to be aligned with the investment goals and risk appetite of the investors. So, we would repeat here once again that these are important considerations. Other significant parameters to include in the equation are returns, duration for which an investment is being made and liquidity. Additionally, please note that returns should be assessed before entering the fray.
A summary of these factors is detailed below.
- Investment goals: This is essentially the departure point for any investment. If the goal is clear, decisions such as how much to invest, when, for how long and in which mode become an easy exercise. For instance, if you plan to have a regular stream of income, MIPs are a good option but if you want the highest returns possible and have a high-risk appetite, direct equity investment might also work.
- Risk appetite: It’s again one of the core factors to keep in mind before picking your investment mode or security type. For people seeking out a regular income stream without being exposed to a high level of risk, MIPs are a good option. Please note here that all market-linked investments carry some risk. In case of doubt or query, please seek out professional health.
- Liquidity: What sort of liquidity do you expect from your investments? This is often dictated by your needs and financial obligations. Remember that while monthly income plans are more liquid than equity investments, they are not as liquid as bank deposits.
- Fees and investment horizon: It would be worthwhile to compare fees and other related charges associated with different monthly income plans so you choose one that you are comfortable with. Additionally, it’s important to know for how long you can keep your money invested and how much. Please note here that monthly income plans are better suited to long-term investors.
Benefits of Monthly Income Plans
Some of the biggest benefits of investing in a monthly income plan are the tax benefits that can accrue over time, professional management of the portfolio and liquidity. A summary of the many benefits that investment in these schemes can lead to is given below:
Professional Management: Experienced fund managers manage monthly income plans. They have the expertise to design a correct mix of assets. This is helpful when it comes to reducing investment risks.
Tax benefits: Some monthly income plans offer tax deductions under Section 80C and Section 10 (10D) of the Income Tax Act 1961.
Liquidity: While not as liquid as bank deposits, some monthly income plans provide liquidity to investors. It’s worth noting here that they provide more liquidity than equity investments. However, if sold in a hurry or without proper deliberation, you may not get a decent price for your investments. Selling these units in itself is not hard though.
Monthly Income: As the name suggests, the plans offer regular monthly income to investors. This can work extremely well for those who need a regular stream of earnings to fulfil their living expenditures or other financial responsibilities.
Growth Potential: Monthly income plans can offer investors growth options as most plans invest in a mix of debt and equity securities. However, it’s worth noting here that these are not as risky as equities but also not as rewarding. The returns are lower than well-planned equity investments.
Bottom Line
It’s usually suggested that people first pick their schemes or plans based on their investment objectives. When a portfolio is holistic and in line with your needs, the chances of a positive outcome are higher.
Therefore, to begin the journey of a MIP, it’s a good idea to start by assessing the monthly income requirements and the investment objective and then by choosing the right income scheme for a well-balanced portfolio.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
{{ showReadFullArticleContent ? 'Hide the article': 'Read the full article'}}
What are some of the best annuity plans?
Some of the annuity plans that have a good track record include the Bajaj Allianz Immediate Annuity Plan, HDFC Life New Immediate Annuity Plan, TATA AIA Saral Pension Plan, Max Life Guaranteed Lifetime Income Plan and ICICI Pru Guaranteed Pension Plan Flexi.
What are some of the best ULIPs?
Some of the decent ULIPs in the market are Tata AIA Fortune Pro, Bajaj Allianz Smart Wealth Goal, Aditya Birla Wealth Aspire Plan, HDFC Life Click2Invest, Max Life Online Savings Plan and PNB MetLife Mera Wealth Plan.
How are monthly income plans different from other fixed investment options?
MIPs (Monthly Income Plans) focus on generating monthly income, have moderate risk, and include both debt and equity instruments. They offer potential for capital appreciation, and varying tax treatment, and are professionally managed by fund managers.
The Forbes Advisor editorial team is independent and objective. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site. This comes from two main sources.
First, we provide paid placements to advertisers to present their offers. The payments we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market.
Second, we also include links to our advertisers’ offers in some of our articles. These “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the listings or commentary our editorial team provides in our articles or other impact any of the editorial content on Forbes Advisor.
While we work hard to provide accurate and up to date information that we think you will find relevant, Forbes Advisor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof.
