Best Investments to Get a Monthly Income in India

Generating a steady monthly income is a financial goal for many individuals. Whether you’re planning for retirement, looking for passive income sources, or aiming to supplement your regular income, investing in instruments that provide monthly income can be a prudent strategy. In India, there are many investment avenues designed to provide consistent monthly returns.  Exploring some best options available in 2024.

1. Senior Citizens Savings Scheme (SCSS)

Senior Citizens Savings Scheme is a government-backed investment vehicle specially designed for senior citizens aged 60 years and above. It offers an attractive annual interest rate, currently 8.2%, payable quarterly. Investors can contribute up to Rs.15 lakh into this scheme, making it an ideal option for those seeking regular income after retirement. However, it is important to note that the interest earned is taxable.

2. Post Office Monthly Income Scheme (POMIS)

Post Office Monthly Income Scheme is another reliable option for individuals looking for monthly income. Backed by the government, POMIS offers a competitive annual interest rate of 7.4%, paid monthly. Investors can start with as little as Rs.1,500 and invest up to Rs.4,50,000 individually or Rs.9,00,000 jointly. The investment tenure is five years, and reinvestment options are available on maturity.

3. Long Term Government Bonds

For risk-averse investors seeking stable income, long-term government bonds are an excellent choice. These bonds, with maturity periods ranging from 5 to 40 years, offer monthly interest payments or coupon payments fixed by the Government of India. Government bonds are considered low-risk investments, making them suitable for income generation.

4. Corporate Deposit

Corporate deposits from non-banking financial firms (NBFCs) and housing finance companies (HFCs) can offer higher returns than traditional bank deposits. Although they offer attractive interest rates, investors should thoroughly research the financial health and reputation of the issuing companies before investing. Corporate deposits provide flexibility and can be a source of monthly income.

5. Monthly Income Plans (MIP)

Monthly income plans offered by mutual fund companies allocate a significant portion of their portfolio to fixed-income instruments and a small percentage to equities. They aim to provide regular income to investors through dividends or systematic withdrawal plans. While MIPs offer monthly income potential, returns are subject to market performance and are not guaranteed.

6. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is a government-backed pension scheme specially designed for senior citizens. It offers a steady income with fixed interest rates, which is currently 4% per annum. The policy term is ten years, and annuity payments can be received monthly, quarterly, half-yearly, or annually, giving flexibility to pensioners.

7. Life Insurance Plus Savings Plans

Some life insurance plans combine savings with guaranteed income options. These plans offer policyholders the option to receive pre-determined monthly payments after maturity. They provide financial security to the policyholder and his family by ensuring regular income.

8. Systematic Withdrawal Plans (SWP)

Investors with mutual fund investments can opt for a Systematic Withdrawal Plan (SWP) to receive regular payouts. SWP allows investors to withdraw a fixed amount at regular intervals, giving them a source of monthly income while staying invested in the market.

9. Equity Share Dividend

Investors with a higher risk appetite can consider investing in dividend-paying equities. Companies that regularly distribute dividends can provide a consistent source of income to shareholders. However, it is important to diversify the equity portfolio to minimize the risk.

10. Annuity Plans

Annuity plans offered by insurance companies guarantee regular income at a low-risk level. Investors can choose between immediate annuities, which begin payments immediately after the lump sum is invested, or deferred annuities, where payments begin after a specified period. Annuities provide income protection but may involve fees and taxes.

Factors to consider:

Before investing in any monthly income plan, it is necessary to consider several factors:

1. Risk Tolerance: Assess your risk tolerance to choose investments that suit your financial goals and comfort level.

2. Tax implications: Understand the tax implications of your investments, including taxes on interest income and capital gains.

3. Investment horizon: Determine your investment horizon and choose schemes that match your time frame.

4. Liquidity needs: Consider your liquidity needs and select investments that provide flexibility when needed.

5. Diversification: Spread your investments across different asset classes to reduce risk and increase returns.

Conclusion:

In conclusion, the best investment for monthly income in India depends on individual financial goals, risk appetite, and investment preferences. By carefully evaluating options and considering relevant factors, investors can build a diversified portfolio that generates consistent monthly income while meeting long-term financial objectives.