Monthly income can offer us significant stability and allow us to account for our financial needs with ease. To generate a monthly income alongside regular income, consider investing in monthly income schemes that offer consistent returns. These plans are designed to offer stability and help idle cash grow over time. Today, you can explore several monthly income schemes to pick one that suits your needs. However, before buying an insurance plan it is important that you weigh in other aspects carefully.
What Should You Consider Before Investing in a Monthly Income Scheme?
Think about the following to refine your investment plan and generate substantial returns on your corpus.
- Consider investing in monthly income schemes when the rate of interest is high. This is because a higher rate of interest can help accumulate earnings faster.
- Identify your financial goals and limitations to understand which monthly income scheme would be suitable for you.
- Once you have listed your choice of monthly income schemes you must compare their scope, performance, and limitations. This will help you understand which plan would be most beneficial for your goals.
Role of Monthly Income Scheme for Accumulating Wealth
Regular investment plans can benefit you in multiple ways. To begin with, they will help develop a habit of saving a part of your income and investing it in lucrative schemes. Based on the type of investment scheme you choose, your investment habit can help you grow your capital, generate wealth, or build a corpus. Typically, plans that offer monthly returns are deemed suitable for retirement planning. If you invest your money in such a plan you can create an income stream for your retirement. It will help you meet the expenses and retain your lifestyle with ease. Some of the most popular monthly schemes in this regard include –
Senior Citizen Saving Scheme
SCC is an effective investment option to strengthen your retirement plans. The monthly income aspect will help supplement your pension and enable you to lead a comfortable lifestyle post-retirement. Since SSC is backed by the government, senior citizens are exposed to limited risks. However, you should note that only seniors can invest in this for a period of 5 years. The investment is capped at Rs. 15 lakh. You can avail of SSC from your nearest bank or post office. You should note that the interest earned on this plan is added to taxable income and treated accordingly.
Post Office Monthly Income Scheme
India Post’s Post Office Monthly Income Scheme (POMIS) is a type of investment and is a nice way of investing for monthly returns. Because it is backed by the government, it is a great investment choice for risk-averse individuals seeking consistent regular income. You should note that the deposit period for POMIS is 5 years and interest is payable monthly. However, you can reinvest the amount on maturity for another 5 years. In this scheme, you can contribute a maximum of Rs. 4.5 lakhs in individual accounts and invest up to Rs. 9 lakhs in joint POMIS accounts. One of the best things about this plan is that it allows you to invest as little as Rs. 1,500, enabling you to mobilize limited savings over time.
Government Bonds
If you have low risk-taking capacity, you can consider investing in government bonds. Typically, these plans come with a maturity period extending from 5 to 40 years. Interestingly, the government issues this bond to raise funds from the public. In exchange, these bonds pay a monthly interest or offer coupon payments that are set by the government.
Monthly Income Plans
This particular income plan invests majorly in fixed-income instruments and the rest is parked in equity and equity-related securities. In exchange, you can earn a consistent income on a regular basis. You should note that this amount is not fixed and is typically dependent on the fund’s performance. This is why you must assess your risk-taking capacity to understand whether you can afford to invest in this plan. Also, you should note that monthly income plans come in two types – one offers growth while the other offers dividends only when there are profits.
Life Insurance Plus Saving
Insurance policies that offer guaranteed income are considered to be among the best monthly income plans. These plans not only offer protection but also extend predetermined payout on maturity. This way the plans can offer financial stability and allow you to build a financial safety net for your loved ones. However, before you purchase insurance make sure to check the features and read the exclusions properly.
Annuity Plans
Similarly, you can consider investing in annuity plans. These plans are designed to offer consistent income without exposing your portfolio to high risks. These plans can be used to enhance retirement planning and can be availed readily from an insurance company. Annuity plans require lump sum investments to offer income at regular intervals. Based on your needs and desired investment horizon you can choose an annuity plan between deferred and immediate categories. An immediate annuity plan will offer you regular income after your lump sum payment. On the other hand, a deferred annuity would provide you with money after a predetermined tenure.
Systematic Withdrawal Plans
This monthly income plan is considered to be a lucrative investment option.
It is deemed fit for those who do not want to invest a lump sum amount and would rather stagger their allocation through a systematic investment plan or SIP investment. This plan allows investors to access funds subsequently after substantial investment. You can access a regular income stream through this plan and support your financial needs accordingly. You can easily avail of such investment options from a fund house.
Equity Dividends
This investment option offers a consistent income stream along with long-term gains. However, you should note that it comes with significantly high risks. Now to avail higher dividend payouts you need to build a diverse portfolio featuring multiple stocks. You should note that companies typically do not pay dividends unless they generate profits.
Based on your financial goals and requirements you can pick any of these monthly investment schemes. However, make sure to pick a plan that supplements your income and does not strain your finances or expose you to unwarranted risks.