Best Monthly Income Plans (MIP)

As the name suggests, Monthly income plans are those plans in which an individual receives a certain amount of money every month. Today in this article, we will be discussing some of the top monthly income plans. Investors should note that there are many different entities & options available that offer various monthly income plans, each with different eligibility requirements and benefits. So before you plan to choose one, one should go through its benefits and other information carefully. 

1. Post Office Monthly Income Scheme (POMIS)

Post Office services and products are not limited to banking, rather also offer different savings options out of which Post Office Monthly Income Scheme is one of the popular schemes. In POMIS, investors can make a maximum deposit of Rs 4.5 Lakhs in the case of a single account holder and of Rs 9 Lakhs in the case of a joint account. POMIS offers a return rate of 6.6% per annum payable monthly with maximum investment tenure of 5 years. 

Key Features of POMIS

• Eligibility and Age limit: Only Indian residents can start investing in this monthly plan. An account can be made in the name of a child if he/she is 10 years of age.
• Taxability: This plan does not fall under Section 80C and thus, the income is subjected to taxation. No TDS is deducted from the income amount.
• Risks associated: As the scheme offers fixed rates, the investment is not subjected to the market risks and thus, is a secure mode of investment.

2. Fixed Deposits Monthly Income Plan

One of the best and low-risk monthly income plans are offered by Fixed Deposits. In this scheme, the investor invests an amount for a fixed term and earns a fixed interest depending upon the tenure of investment. The interest rate offered by these fixed deposit monthly plans is usually 5%, varying with the chosen bank. Some of the key benefits of this scheme are mentioned below:

Key Features of Fixed Deposits

• Eligibility: Below mentioned are eligible to invest in this plan.
  • Individual
  • Joint account (Minor with guardian)
  • Companies
  • Partnership
  • Non-Indian residents
  • Any institute or association
• Interest rates: The interest rates offered by monthly income FDs are generally similar to those of regular FDs, varying with the banks.
• Taxability: Some banks often deduct TDS on the income. If the yearly income exceeds Rs 10,000, banks often deduct the TDS at a rate of 10%.
• Risks associated: This scheme offers regular fixed monthly income with the low risk associated with it. Hence, this is one of the safe and secure monthly income plans which may be chosen by the investor.

3. Senior Citizen Saving Scheme (SCSS)

SCSS is a government-backed monthly income plan specially designed for individuals of age 60 years or above, employees above 55 years of age who retired on superannuation or defense employees above 50 years of age to ensure a regular flow of income even after their retirement. The investor must meet the above-mentioned age criteria along with being a citizen of India. NRIs and HUFs are not eligible to invest in this plan. The current interest rate offered on the SCSS is 7.4% p.a. which is subject to quarterly revisions by the Government of India. 

Key Features of SCSS

• Eligibility: The investor must be a resident of India and must belong to the following :
• Above 60 years of age
• Employees retired on superannuation or VRS with an age above 55 years & below 60 years of age
• Retired defense employees with an age above 50 years & below 60 years of age
• Non-Indian residents and HUFs are not eligible to invest in this plan.
• Tenure: Maximum of 5 years is offered by this plan. However, a one-time extension of further 3 years is also available if required.
• Taxability: The income earned on the Senior citizens saving scheme is subjected to taxability. If the earned income exceeds Rs 50,000, TDS will be deducted at the applicable rates.
• Investment limits: Minimum deposit amount of this plan is Rs 1,000 whereas the maximum limit is Rs 15 Lakhs.

4. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is a specially designed income plan for Indian residents above 60 years of age. This plan is available for monthly, quarterly, semi-yearly, and yearly investments, with a maximum investment limit of Rs 15 lakhs. The interest rates applicable on this plan is currently 7.4% per annum. 

Features of PMVVY

• Investment limit: The applicant can invest an amount of Rs 15 Lakhs through this scheme.
• Income earnings: If the applicant survives till the maturity of the term plan, then the policyholder will get the policy amount of the annuity in addition to the final installment amount.

If the policyholder dies before the maturity of the term plan, the amount of annuity will be provided to the beneficiary.

• Loan facility: A loan facility for up to 75% of the purchase price is also offered after the completion of three years of the policy.

Comparison

5. Systematic Withdrawal Plans from Mutual Funds

A systematic withdrawal plan in mutual fund investments can also act as a monthly income plan. In this plan, the investor can select a fixed amount which he wants to withdraw monthly from his mutual fund investments. That way, the investor will be getting regular withdrawals along with the capital gain potential on the existing investments. 

Every month, some units of the unit balance will be redeemed offering a regular payout to the investor. This option is favorable for those who want a regular inflow of income to meet their expenses, or any recurring expenses needs like EMIs, fees, etc.  

Key features of SWP

• Flexibility: In this plan, the investors have the option to select a date, amount to be redeemed, and frequency offering a good flexibility to invest as per their requirements. The SWP can be halted/stopped as per the requirement of the investor.
• Taxability: As withdrawals from SWP plans are simply the redemption from mutual fund investments, the taxability on gains is also the same. It is different for equity & debt-oriented schemes.
• Regular Income: SWP in mutual funds can offer a regular inflow of income as desired by the investor monthly along with earning capital appreciation on the money already parked in the market. Thus this option is highly favorable for meeting the expenses efficiently.