By Mark Wright I’m sure you’ve heard of the best monthly income scheme out there. I don’t blame you for being skeptical, but this is a great opportunity to make some extra money and get rewarded monthly. Most traditional insurance plans only payout once a year, but with this scheme, you can get paid every month! Plus, there are no long-term contracts or commitments.
In this article, we will try to understand which are the best monthly income scheme in India.
But before that let’s understand what a monthly income plan is.
- Monthly Income Plans are the finest solution for those who need a steady stream of income as a backup.
- It is an investment system in which an individual receives a set amount of money each month that grows overtime after the premium is paid.
- Monthly guaranteed income plans, assured monthly income plans, and monthly pension plans are all terms used to describe this type of plan.
But usually, there are a lot of plans in the Indian market. Like mutual funds, insurance plans, debt funds, and liquid funds.
Mutual Funds are the most common association with Monthly Income Plans. These make investments in securities and give you a monthly dividend.
Life insurance firms, on the other hand, provide monthly income plans. These strategies are a little different.
These plans have a life insurance component in addition to a continuous income stream. This factor makes it better than a traditional insurance plan.
Now that we have understood what Monthly income plans are, let’s get to know the features of these monthly plans. What are the necessary characteristics of these plans?
Let’s get to know more.
Monthly Income Plan Features
Due to the equity component, Monthly Income Schemes have produced superior long-term returns than pure debt funds and traditional insurance plans.
Monthly Income Plans, on average, provide returns of 10% to 12%, which is higher than most fixed-income investments.
Insurance companies offer life insurance as part of their Monthly Investment Plans. A MIP, in addition to providing a monthly payment, ensures that your family is financially secure.
The following are some characteristics of monthly income plans.
- In terms of returns, it outperforms other similar saving plans and fixed deposits.
- There is no investment limit for monthly income plans.
- There are no entrance loads or processing fees to pay.
- The exit load must not exceed 1%.
- A high level of liquidity.
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Best monthly income scheme in Indian Market
These are the monthly income schemes that promise a steady monthly income.
1. Fixed Deposits
This is a great way to invest your money if you want reasonable returns with low risk. As long as the bank offers fixed deposit accounts, all that needs to be done in this case would be investing lump-sum and getting interest payments throughout each month!
- You can open an FD for as little as seven days and as long as ten years.
- Varied banks have different rates, which usually range from 6% to 8%.
- An FD allows you to withdraw a portion of your money, but the interest rate may be reduced.
- Is eligible for deductions under Section 80C of the Internal Revenue Code?
- This form of deposit is mostly for retirees and older persons.
2. Post Office monthly income scheme
Post offices are not just places to send and collect your letters; they also provide attractive investment schemes.
One such option is POMIS – income-generating security that comes with safety features like low-risk involvement and protection against unforeseen circumstances in case anything unfortunate happens!
- Five years lock-in period
- A 6.60 % interest rate (w.e.f. 2020)
- The POMIS plan allows you to register a joint account, allowing you to include your spouse.
3. Government Bonds
Government bonds are a low-risk best monthly income scheme option that can give you guaranteed returns. They’re backed by the government, so there is no risk of losing money in case anything goes wrong with your investments since they’ll be refunded automatically!
- You could choose between different types depending on how long-term or risky (or safe) you want to be.
- A 10- or 20-year bond offers an interest rate between 7% and 10%.
- You also get a tax benefit.
4. Mutual Funds
A systematic Withdrawal Plan is an excellent way to earn a consistent monthly income. In India, mutual funds provide a feature that allows you to withdraw money from the fund regularly.
- A mutual fund is created by pooling the money of many different investors. The fund’s units are formed depending on their NAV.
- Units are assigned to you based on the percentage of your contribution to the fund. You must enter the amount you want to receive each month through SWP.
- The units worth your money will be redeemed regularly to provide you with cash.
Investment in monthly income schemes can be a smart investment for those looking to enjoy financial stability and security.
Let us help you understand the key difference between a Monthly income scheme and a traditional insurance plan:
Composition
They are a mix of equity and debt plans
These plans are provided by various insurance companies. A sum is assured as part of the cover.
Relation with Market
These are linked with the market performance
These funds are not linked with the market
Returns
Returns are not fixed, they vary
The return is the cover and sum assured.
Risk Involved
Low to medium
No risk-low risk
Limits
No limit on investment
The premiums depend on the cover taken.
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Conclusion
If you’re looking for an investment that will give you peace of mind and provide a steady stream of income in retirement, then a monthly income plan may be right for you. Talk to your financial advisor today to learn more about this type of investment