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Aman Khanna
by on September 24, 2019
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Having a regular source of income is necessary, especially for self-employed individuals and senior citizens. Constant earning is beneficial for small business owners to avoid a shortage of funds. On the other hand, retired individuals can benefit from the same as it can help them cater to their expenses.

Opting for the best investment plan that provides monthly income is helpful for not only the above individuals but also for employed and unemployed ones.

There are several such options available from the Government of India as well as from private and public financial institutions.

Some of these plans are mentioned below –

 

  • Non-cumulative fixed deposits

 

Fixed deposits usually provide returns after maturity. Such FDs are also known as cumulative fixed deposits.

A non-cumulative fixed deposit provides periodic interest pay-outs. You can choose to avail the returns monthly, quarterly, half-yearly, or yearly. Do note that the interest earned on such FDs is subject to income tax. The interest earned on a fixed deposit will attract TDS if the amount is more than Rs. 10,000 and your income falls in any one of the tax slabs.

You can file Form 15G or 15H (senior citizens) if your interest income is not taxable and thus, eliminate TDS on FD interest earned.

Cumulative FDs also enable you to avail a loan against it. Usually, NBFCs restrict the loan amount to 65% of the invested one.

Non-cumulative FDs are the best investment plan for monthly income as you can invest as low as Rs. 25,000 to open an account.

Financial institutions like Bajaj Finserv provide both cumulative and non-cumulative Fixed Deposits. They offer interest rates of up to 8.60%. Senior citizens can enjoy an additional 0.35% interest. Additionally, an investor can enjoy an additional 0.25% more interest when they renew their account.

Do make sure that you know the pros and cons of investing in fixed deposits before you create an account.

 

  • Post Office Monthly Income Scheme (MIS)

 

The Monthly Income Scheme (MIS) is provided by all Indian Post Offices and offers an interest rate of 7.6​% as of 1st July 2019. The maturity period of an MIS is 5 years.

An MIS account can be held by a maximum of 3 individuals. However, a single individual can hold multiple accounts.

The maximum deposit amount is restricted to Rs. 4.5 Lakh in case of an individual account and Rs. 9 Lakh for joint accounts. The minimum deposit needed to create an MIS is Rs. 1,500. Account-holders have to invest in multiples thereof.

The interest earned on the MIS is transferable to a savings account present in the same post office through ECS or post-dated cheque. Account-holders can transfer the interest earned to any CBS (core banking solution) post office in India if the MIS account lies with the same.

MIS also falls in the list of best investment plan for monthly income as it is one of the ideal options to manage post-retirement finances.

 

  • Monthly Income Plan (MIP)

 

A Monthly Income Plan (MIP) is a type of mutual fund that provides regular income in the form of dividend payments.

Funds deposits in a MIP are usually invested in debts or equities. The majority portion of the funds is invested in debts to increase earnings. Some AMCs deposit around 30% in equities and the rest in debts. Others keep the investment in equities to 10%.

MIPs do not necessarily provide monthly income even if they are called so. Investors can avail returns if the market conditions are good. Additionally, the returns earned are fully taxable. Hence, these may not be the best investment plan for monthly income.

Those investing in mutual funds can move their investments to FDs as the latter provides guaranteed returns irrespective of market conditions.

 

  • Senior Citizen Savings Scheme (SCSS)

 

A Senior Citizen Savings Scheme (SCSS) is an investment scheme for retirees, which provides returns on a quarterly basis. SCSS provide income tax benefits under Section 80C.

Currently, the rate of interest offered by SCSS is 8.6%. The maturity period of this scheme is 5 years.

Senior citizens can open an account for as low as Rs. 1,000. They have to invest in multiples thereof. The maximum amount account-holders can deposit is Rs. 15 Lakh.

A fixed deposit is the best investment plan for monthly income compared to the ones mentioned above. It is one of the safest schemes providing high and guaranteed returns.

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