A regular monthly income is one of the fundamental elements of financial planning. While you plan for emergencies or long-term gains, it is important that you ensure your family’s financial security. Having the right kind of backup plan for your family’s regular expenses is of utmost importance. It can be taken care of with dependable investments which ensure steady, assured returns at all times irrespective of market conditions, macro-economic indicators or inflation. Staggered payouts provided by these instruments can help you ensure a regular monthly income for your family.
Here are some investment options that can help you earn a regular income:
A Non-Banking Financial Company (NBFC) or a Housing Finance Company (HFC) offers a company FD with a high rate of interest as compared to traditional bank FDs. Apart from the high-interest rate, these corporate deposits also offer flexibility in terms of interest payouts. You can choose quarterly, annually or half-yearly interest payout frequency. Senior citizens can earn higher interest rates on company FDs.
However, it is important to ensure that you choose a company FD which has high credibility and consistency in paying interest payouts. You can assess this by evaluating the credit ratings of company FDs. These ratings are provided by third-party credit rating agencies such as ICRA and CRISIL. A higher credit rating indicates a superior payout ability of the company. Bajaj Finance FDs come with a credit rating of MAAA/stable by ICRA and FAAA/stable by CRISIL. This means your principal amount is safe and monthly returns are guaranteed without any risk. You can calculate FD calculator monthly interest.
Post Office Monthly Income Account Scheme
This is a scheme custom made for investors who are looking for absolutely zero risk options. The Post Office Monthly Income Account scheme offers continuous income through an interest rate of 7.7% per annum, payable monthly. With an investment period of 5 years, you can invest up to Rs. 4.5 lakhs individually or Rs. 9 lakhs jointly. The minimum amount to invest in this scheme is Rs 1,500.
Although TDS is not applied, the scheme does not provide any tax benefits.
Senior Citizen Savings Scheme
This is a government-backed savings instrument offered to senior citizens only (Indian resident aged over 60 years). However, the age criterion is reduced by five years to 55 years or above if you have retired under applicable superannuation or VRS rules. In such cases, you must open the account within one month of the receipt of retirement benefits.
Being a sovereign debt, the scheme is risk-free and also has a high-interest rate of 8.7% per annum. The scheme has a maximum cap of Rs. 15 lakhs and the minimum amount to start an account is Rs. 1000.
The obvious drawback of the scheme is that you have to be a senior citizen in order to invest in it.
A regular income can also be earned through annuity products offered by many insurance companies. The concept is to make a lump sum investment and then earn proceeds at fixed intervals. The two popular classifications under these products are– deferred annuity and immediate annuity. This classification is simply based on the duration of the payment period. The deferred annuity begins after a certain fixed tenor set by you while the immediate annuity earns you regular income as soon as the lump sum payment is made.
Also, annuity schemes do not have any tax benefits and also include several charges like commission and surrender fees.
Mutual Fund Monthly Income Plans
Monthly Income Plans (MIPs) are a type of hybrid funds wherein investments are made in both debt/money market instruments and listed/unlisted equities. Generally, the ratio is such that 80% of the investment is made in debt instruments making it only moderately risky. An ideal tenor for such investments is 2-3 years.
It is important to understand that though the name “monthly income plan” might imply guaranteed returns on a monthly basis, the truth is that the returns are subject to a degree of market risk in case of mutual funds.
Investors looking for low risk, stable returns, and higher stability, often choose to invest in Fixed Deposit. A piece of important advice when it comes to Company FDs is to invest in multiple FDs spread across diverse lenders at varying times and for different tenors. This approach is known as ‘Laddering’ or ‘Staggering’ of FDs and can be done easily with Bajaj Finance FD because of its online FD tracking and managing services via Experia-your online fixed deposit account.
Planning for your family’s financial future is extremely crucial and must be done only after considering all the viable options in the market.