Best Investment for Monthly Income in India

Investors tend to think that the primary purpose of an investment is long-term wealth creation. However, that’s far from the only purpose. There are several investments that provide a steady source of income each month instead of long-term wealth. As an investor, you need to be aware of what the options are so that you can make a well-informed decision.

In this article, we’re going to look at some of the best investment plans for monthly income in India and some factors you need to consider before investing in them. Now, before we get to the list of investment options, let’s quickly try to understand the importance of monthly income investments.

Significance of Investing in a Monthly Income Investment Plan

In the case of traditional long-term investments, you get the returns only at the end of its tenure. Until then, you either have to wait patiently or keep contributing regularly. While this might be okay if you’re looking to build a corpus for your future, it may not be of much use if you’re looking to generate regular income.

Here’s where investments that offer monthly returns can help. The monthly income they provide can be used to take care of your living expenses or to supplement your primary source of income. In some cases, you may even have excess income left after using them to meet your expenses. You can reinvest this excess income in another investment to boost your wealth creation potential.

That’s not all. When you invest a lump sum amount in one of the best monthly income schemes in India, the monthly payout starts immediately and is distributed to you at your desired frequency. Some investments even have the option to defer the monthly income payouts to a later date.

Factors to Consider Before Investing in a Monthly Income Investment Plan

Now that you’ve seen the importance of investing in a monthly income scheme, let’s look at some factors you need to consider.

• Interest Rates in the Market

  The interest rates of most investments that provide a monthly income are dependent on the rates in the market. For instance, these investments are likely to offer better returns when the interest rates in the market are high and vice versa. Therefore, before you invest in a monthly income scheme, always remember to check the rates in the economy.

• Risk Involved

  Not all monthly income investments have the same level of risk. Some of them feature zero risk since they’re backed by the government of India, whereas market-linked investments like mutual funds can be very risky. Ideally, you should look to invest in a plan that matches your risk profile and tolerance levels.

• Lock-In Period

  Some monthly income plans have a lock-in period during which you cannot withdraw your investment. Meanwhile, others levy a penalty for premature withdrawal. As an investor, you need to be aware of such conditions before investing.

Best Investments for Monthly Income in India in 2024

If you’re looking for some good investment options that can provide a steady source of income, here are 10 different options you can consider investing in 2024.

• Annuity Plan

  An annuity plan is a life insurance product that provides a regular monthly payout for life in exchange for a lump sum amount or regular premium payments. One of the best monthly income schemes in India, annuity plans give you the freedom to choose immediate monthly payouts or deferred monthly payouts. In the event of your death, the amount you had originally invested in the annuity will be paid to your nominee.

• Post Office Monthly Income Scheme (MIS)

  Offered by India Post, a government-backed entity, the Post Office Monthly Income Scheme can help you establish a steady source of income. All you need to do is invest a lump sum amount in the scheme. The maximum amount you can invest as a single account holder is Rs. 4.5 lakhs.
  In the case of a joint account holder, you can invest up to Rs. 9 lakhs. The interest rate applicable to the scheme is revised by the government every quarter. Currently, the MIS interest rate is 7.4% per annum for the October to December 2023 quarter.

• Long-Term Government Bonds

  Issued by the Reserve Bank of India, long-term government bonds are debt instruments with tenures ranging from 5 to 40 years. These investment options carry zero risk of default, which makes them the best investment for monthly income in India for risk-averse investors. However, the interest rates on long-term government bonds tend to be lower compared to other options.

• Corporate Deposits

  As the name implies, corporate deposits are an investment option offered by companies. Routinely used by Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) to raise money, corporate deposits provide a high rate of interest compared to traditional bank deposits. However, they’re highly risky. Therefore, it is advisable to check the credit rating of the company and its financial health before investing.

• Senior Citizen Saving Scheme (SCSS)

  Also offered by India Post, the Senior Citizen Saving Scheme is the best investment plan for monthly income in India for citizens above the age of 60. It is safe, offers guaranteed returns and carries a higher rate of interest than the Post Office Monthly Income Scheme. The SCSS interest rate is also revised every quarter. For the October to December 2023 quarter, the rate of interest is 8.2% per annum.

• Monthly Income Plans

  Monthly Income Plans (MIPs) are unique mutual funds that invest primarily in debt instruments and provide monthly payouts. However, the returns may not always be guaranteed since they’re linked directly to the performance of the market.

• Pradhan Mantri Vaya Vandana Yojana

  Another government-backed monthly income scheme, the Pradhan Mantri Vaya Vandana Yojana is a life insurance pension scheme for citizens aged above 60 years. All you need to do is invest a lump sum amount, which will be used to provide you with a monthly pension for a tenure of 10 years. The minimum amount of investment is Rs. 1.5 lakhs, whereas the maximum amount of investment is limited to Rs. 7.5 lakhs.

• Guaranteed Income Life Insurance Policy

  A guaranteed income policy is a dual-benefit life insurance plan that offers both savings and life insurance coverage. With these kinds of plans, you can choose to make periodic premium payments or a lump sum premium payment. Your premium payments are then invested by the life insurance company to build a corpus. The monthly payout starts once the policy matures and is often paid for life.

• Systematic Withdrawal Plans

  A Systematic Withdrawal Plan (SWP) is one of the best monthly income schemes in India that involves market-linked investments. SWP is a feature that allows you to periodically withdraw a fixed sum of money from your mutual fund investment. These scheduled withdrawals continue until you’re left with no more mutual fund units to redeem.

• Equity Share Dividends

  Fundamentally strong companies generally issue dividends regularly. You can consider investing in them in such a way that you get a steady stream of dividend payouts almost every month. That said, keep in mind that dividends are issued from the profits and are not guaranteed.

Conclusion

So, there you have it. 10 of the best investment plans for monthly income in India. Now, before you proceed to invest in one, make sure to thoroughly research the various benefits and risks involved. Also, consider factors like your financial goals and your risk profile. This will help you choose an investment plan that’s ideal for you.