In today’s fast-paced lifestyle, financial security is of utmost importance. Saving for a rainy day is always a wise decision, but it is not always enough. That is why investing in monthly income schemes is becoming increasingly popular. These schemes offer a steady flow of income at regular intervals. With a variety of options to choose from, monthly income schemes can be perfect for those looking to diversify their portfolio.
Monthly income scheme refer to investment options where individuals can invest a lump sum amount and receive a regular income in return. These schemes have gained immense popularity due to their ability to provide steady returns that can supplement an individual’s regular income.
Let’s explore the benefits and options of monthly income schemes-
Benefits of Monthly Income Schemes
- Regular Income:
Monthly income schemes offer a regular income at predefined intervals that can help individuals meet their daily expenses without relying on their regular salary.
- High Returns:
These schemes offer higher returns than traditional bank deposits. Monthly income schemes offer returns in the range of 7% to 9% per annum, whereas bank deposits offer returns in the range of 4% to 6% per annum.
- Low Risk:
Monthly income schemes are relatively low-risk investment options. They offer a fixed rate of interest and are backed by government or trusted financial institutions.
- Tax Benefits:
Monthly income schemes offer tax benefits through deductions under Section 80C and Section 80TTB of the Indian Income Tax Act. Investors can save up to Rs. 1.5 lakh per annum under Section 80C and up to Rs. 50,000 per annum under Section 80TTB.
Options for Monthly Income Schemes
- Fixed Deposits:
Fixed deposits are the most popular monthly income scheme in India. They offer a fixed rate of interest and have a maturity period of one to ten years. Fixed deposits are offered by banks, post offices and financial institutions.
- Monthly Income Plans:
Monthly income plans are mutual funds that invest in a mix of debt and equity securities. They aim to provide regular income through dividends or interest payments. The NAV of monthly income plans fluctuates with market conditions and is subject to market risks.
- Senior Citizen Savings Scheme:
Senior Citizen Savings Scheme (SCSS) is a government-backed monthly income scheme designed exclusively for senior citizens. It offers a fixed interest rate of 7.4% per annum and has a maturity period of five years. Investors can invest up to Rs. 15 lakh in the scheme.
- Post Office Monthly Income Scheme:
The Post Office Monthly Income Scheme (POMIS) is a government-backed monthly income scheme that offers a fixed interest rate of 6.6% per annum. The scheme has a maturity period of five years, and investors can invest up to Rs. 4.5 lakh in the scheme.
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Conclusion
Monthly income schemes are an ideal option for individuals looking to supplement their regular income with steady returns. They offer a range of benefits such as regular income, high returns, low risk and tax benefits. There are different options to choose from, such as fixed deposits, monthly income plans, senior citizen savings schemes and post office monthly income schemes.
However, before investing in monthly income schemes, it is essential to calculate the risk and return potential of each scheme and assess the investor’s financial goals. It is advisable to invest in monthly income schemes that offer a stable interest rate and have a lower market risk.
Monthly income schemes are an excellent option to create a steady stream of income and secure financial stability. However, it is essential to evaluate the pros and cons of each scheme before investing in them. Lastly, it is important to note that all investments carry risks, and it is crucial to gauge all the pros and cons of trading in the Indian financial market.
Summary:
Monthly income schemes refer to investment options where individuals can invest a lump sum amount and receive a regular income in return. These schemes offer a steady flow of income at regular intervals and have gained immense popularity due to their ability to provide steady returns that can supplement an individual’s regular income. The benefits of monthly income schemes include regular income, high returns, low risk, and tax benefits. The options for monthly income schemes include fixed deposits, monthly income plans, senior citizen savings schemes, and post office monthly income schemes. However, before investing in monthly income schemes, it is essential to calculate the risk and return potential of each scheme and assess the investor’s financial goals.
