If you’ve got a substantial disposable sum in your hands, then investing it in schemes that offer regular monthly plans is a great idea. These schemes will provide you the monthly income to cover your monthly expenses in your retirement. This ensures that your idle money starts paying out dividends or profits.
Post Office Monthly Income Scheme
Post Office Monthly Income Scheme (POMIS) is an investment offered by India Post. POMIS amongst others such as Post Office Savings Account, Post Office Recurring Deposit, Post Office Time Deposit, is one of the highest-earning schemes with an interest rate of 6.6%.
Features of POMIS
- You cannot withdraw the amount deposited in such an account prior to 5 years when you open the monthly income account with the post office.
- An individual can invest a maximum of Rs 4,50,000, and this limit is doubled for joint accounts.
- The minimum amount which can be invested is Rs. 1,500 for any individual.
- You can transfer your POMIS account to a convenient post office.
- After POMIS mature, the same can be reinvested for another five years.
- If you redeem your investment within the 1st and 3rd year, a 2% penalty is charged. If you redeem within the 3rd and 5th year, a 1% penalty is charged.
- The interest amount does not incur any Tax Deducted at Source (TDS); however, it also does not attract any tax benefits under Section 80C.
So we can say POMIS is a low-risk scheme that is a viable starting point. It provides the individual with the confidence to take on greater risks in the future
If you have short-term investment goals but don’t want to deviate towards riskier options like shares or mutual funds, go for company FDs. Numerous non-banking financial companies (NBFCs) and housing finance companies (HFCs) offer corporate deposits. Corporate deposits offer a high-interest rate and come with an added flexibility, which bank deposits don’t provide. Before making investments in corporate deposits, you must check for the financial strength and credibility of the NBFC. For this, you can make use of CRISIL ratings or can take help your mutual fund investment experts.
Features of Corporate Deposits
- These deposits function as regular fixed deposits but feature higher interest rates.
- They are low-risk investments and do not face the influence of market forces.
- You get to choose your tenor or maturity terms in some flexible cases.
- They offer non-cumulative and cumulative interest pay-outs.
- They feature safety ratings by credit agencies like ICRA and CRISIL. You can choose one based on how high the ratings are.
It totally up to your choices like want to invest in Bank FDs or Corporate FDs. If you want more security, then bank deposits are good. But if your priority lies in receiving higher interest, then company deposits are ideal.
Monthly Income Plan
Monthly income plans (MIPs) are mutual fund plans. The fund houses payout their investors with an amount monthly. This amount is not fixed and varies as per the performance of the fund. Since the performance drives the returns, therefore, it is never guaranteed. Typically designed for conservative risk-averse investors and pensioners, the Monthly Income Plan is an investment option that parks money mainly in lower-risk securities. The income generated through Monthly Income Plans is mostly in the form of interest and dividends. Hence, before deciding to invest in a monthly income plan, you must consider your profile.
Features of MIPs
- It delivers more returns than other similar schemes such as POMIS schemes and fixed deposits in terms of returns.
- There is no limit on the investment for monthly income plans.
- You do not have to pay any entry load or any processing charges.
- The exit load on MIPs cannot exceed 1%.
- There is no lock-in period for MIPs.
- MIPs offers comparatively high liquidity.
4. Senior Citizen Savings Scheme (SCSS)
If you are a senior citizen, then a senior citizen savings scheme (SCSS) is a great investment option. This can be considered an absolutely risk-free scheme and only senior citizens (above the age of 60 years) are eligible to invest in this. You can avail of this scheme at notified banks and post offices. You must subscribe to the scheme within one month after retiring.
Features of SCSS
- Senior citizens of India aged 60 years or above.
- Retired defense personnel with a minimum age of 50 years.
- HUFs and NRIs are not allowed to invest in this scheme.
- An individual can invest a maximum amount of Rs.15 lakh, individually or jointly in an SCSS account (in multiples of Rs.1,000).
- The account can be opened by cash for an amount below Rs.1 lakh and by cheque for an amount exceeding Rs.1 lakh.
- considered to be one the safest and most reliable investment options
- The process to open an SCSS account is simple and can be opened at any authorized bank or any post office in India.
- At 7.4% p.a. the return rate is very good as compared to a savings or FD account.
- Tax deduction of up to Rs.1.5 lakh can be claimed under Section 80C of the Indian Tax Act, 1961
- The tenure of this investment scheme is flexible with an average tenure of 5 years which can be extended up to 3 additional years.
For making any investment just review your profile and risk-taking ability or consult with your investment expert.