Top 7 Fixed Income Plans

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A Fixed Monthly income is a preferred choice for individuals who are close to retirement or who have retired. It is important for senior citizens who are in need of a fixed source of stable income which at the same time is also safe. Fixed monthly income is essential for individuals who do not have a stable source of employment. Senior citizens are eligible for certain government-backed monthly income scheme options that provide marginally higher interest rates and are secure.

7 Best Investment option to get regular monthly income in India

1. Post office MIS

Backed by the Central government, the Post Office Monthly Income Scheme (MIS) is one of the most secure investment avenues. One can make a minimum amount of investment of Rs. 1,500 and the maximum investment limit is set at Rs. 4.5 lakh in a single account and Rs. 9 lakh in a joint account. The current interest rate offered on this investment is 7.3 per cent. Commencing from the date of deposit, the interest is payable monthly.

The Post Office Monthly Income Scheme comes with a maturity period of 5 years. This account can be opened by an individual or 2-3 people with an equal share of investment. After one year but before 3 years, investors can avail premature encashment in MIS, at a discount of 2 per cent of the deposit and after 3 years at the discount of 1 per cent of the deposit.

2. Monthly Income Fixed Deposits Schemes

Fixed Deposit (FD) is a low risk financial instrument where an investment is made for a fixed period of time resulting in a fixed rate of returns. This is best suited for investors with a low risk appetite and who wants to invest a fix sum of money to earn a fixed rate of interest.

Fix deposit is most popular investment option which can offer monthly, quarterly, yearly return. The interest rate will depends on the tenure for which you open fixed deposit. Bank FD would offer 8-9% return per annum. Interest amount from FD is taxable and if your income is not in taxable range you need to submit form 15G/15H.

3. Corporate Deposits

Several corporations provide you with the flexibility to invest in FDs with a high interest rate. Usually these are offered by Non-Banking Financing Companies (NBFCs) and housing finance companies. Such companies provide interest on a quarterly or half-yearly basis, and you can also choose to get returns for any four months in a year. They come with additional interest rates falling between 0.25% and 0.5% for senior citizens. It is important to remember that there could be a slight risk of delay in payment or default from such companies. That is why you should try to ensure that your chosen company has high credibility and consistently stable ratings of AAA from CRISIL or ICRA. In order to diversify the risk, you can distribute your money into deposits with multiple companies, which will also help ensure you receive income for every month of the year.

4. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Pradhan Mantri Vaya Vandana Yojana, a scheme meant for senior citizens, offers a guaranteed interest rate of 8 per cent. LIC or Life Insurance Corporation operates the government’s 8 per cent pension scheme for senior citizens, which is called Pradhan Mantri Vaya Vandana Yojana (PMVVY). In Budget 2018, Finance Minister Arun Jatiley proposed to increase the investment limit in Pradhan Mantri Vaya Vandana Yojana or PMVVY to Rs. 15 lakh from Rs. 7.5 lakh. He also proposed to extend the Pradhan Mantri Vaya Vandana (PMVVY) scheme till March 2020.

Pradhan Mantri Vaya Vandana Yojana provides an assured return of 8 per cent per annum payable monthly (equivalent to 8.30 per cent per annum) for 10 years. The pension is payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/quarterly/half-yearly/yearly mode as chosen by the pensioner at the time of purchase. Currently, in the monthly mode, an investor in the PMVVY scheme gets a monthly interest rate of Rs. 5,000 if he/she invests Rs. 7.5 lakh.

5. Senior Citizen Savings Scheme (SCSS)

This deposit scheme is for individuals who have attained the age of 60 years. Individuals who have attained the age of 55 years but are less than 60 years, can also open the account, subject to they are retiring on superannuation or under any Voluntary Retirement Scheme (VRS). The current interest rate offered on the Senior Citizens Savings Scheme (SCSS) is 8.7 per cent per annum. The interest is payable quarterly at the end of each quarter. SCSS comes with a maturity period of 5 years which can be extended for a further 3 years within 1 year of maturity. The minimum investment is set at Rs 1,000 and the upper limit of investment is set at Rs 15 lakh.

Investors can also opt for premature closure after 1 year on deduction of an amount equal to 1.5 per cent of the deposit and after 2 years 1 per cent of the deposit. The interest earned on the deposit is not exempted from income tax. However, the deposits made in the SCSS scheme are exempt from income tax under Section 80C of the Income Tax Act, 1961.

6. Earnings Regular Income from Mutual Fund Investments

SWP or systematic withdrawal plans of mutual funds help investors earn a regular income from their investments. Under the SWP or systematic withdrawal plan, you need to specify a certain fixed amount as a monthly payout. Then on a designated date, units amounting to that amount would be redeemed. Many mutual funds offer a dividend option but remember that dividends are not guaranteed. It is distributed from gains made by the scheme, which is market linked, or in other words, determined by fund performance and market movements.

7. Long term Government Bond

Long term government bond is one of the safest options to get regular income.  Government bond usually offers 8% return half-yearly. These bonds are long term bonds and at the end of the tenure you will get back your principal amount.

These bonds are also tradable in the secondary market, so you can also sell them if you want to get rid of them.