An investment plan for monthly income is a sort of mutual fund plan that invests primarily in equity securities with the importance of generating cash flows and saving capital. Investment plans for monthly income are best suited for retired persons who seek a steady income instead of capital gains.
An investment plan for monthly income is a scheme where the individual receives a certain sum of money every month. This money generally accrues after a few years of payment of the premium of the investment scheme for monthly income. The best investment plan for monthly income offered by the mutual fund companies also has an insurance cover to protect the insured party and in some cases, a maturity benefit payment at the end of the policy tenure.
This makes the investment option for monthly income slightly different from the pure-play investment plans for a monthly income that mostly pays a monthly payment to the investors. Some of these best investment plans for monthly income provide the provision for a lump sum payment through being a non-insurance product. However, these investment plans for monthly income from mutual funds do not have insurance cover.
Best Investment Plan for Monthly Income
1. Senior Citizen Savings Scheme
If you are a senior citizen, then a senior citizen savings scheme (SCSS) is the best investment option for monthly income. These best investment plans for monthly income enjoy sovereign-backing and only senior citizens (above the age of 60 years) are eligible to invest in this best investment scheme for monthly income. You can avail of this investment scheme for the monthly income at notified bank branches and post offices. You must subscribe to this best investment scheme for monthly income within one month after retiring. You have SCSS offering an interest rate of 7.4% per year, payable quarterly. This best investment scheme for monthly income has a tenure of five years. You can invest a maximum amount of Rs 15 lacs in this investment plan for monthly income However, the interest from this investment scheme for monthly income is added to taxable income and taxed as per your income tax bracket.
There may be several investment options for monthly income, but the ones mentioned above are some of the best investment plans for monthly income. This investment plan for monthly income will help to suit your risk profile and investment objectives.
2. Long-term Government Bond
Long-term government bonds are another safe investment option for monthly income to earn a regular income. Although the maturity period of this best investment plan for monthly income is considerably long (15-20 years) and the government bonds generally offer an 8% return twice a year or half-yearly. So, you can collate them with other investment options for your monthly income of yours to earn income throughout the year. Also, on the maturity of this investment scheme for the monthly income you get back the entire principal amount.
Another benefit of a long-term government bond is that they are traded in the secondary market and hence, you can sell them off as and when you wish.
3. Corporate Deposits
Corporate deposits are one of the best investment schemes for a monthly income that are offered by numerous Non-Banking Financing Companies (NBFCs) as well as housing finance companies. These companies offer interest either on a quarterly or a half-yearly basis. The ideal approach of this best investment plan for monthly income would be to diversify your investment and invest in the funds of different high-ranking companies.
4. SWP from Mutual Funds
As you know, mutual funds are highly popular in India, especially with the millennials and a Systematic Withdrawal Plan (SWP) is an excellent way to ensure a steady monthly income from mutual funds. In this best investment scheme for monthly income, you can specify a certain amount that you want as a monthly payment on your investment. So, every month on a designated date, units corresponding to that amount would be redeemed. Unlike dividends (that depend on profits made by funds), this investment plan for monthly income guarantees a regular income.
5. ICICI Prudential MIP
The ICICI Prudential MIP offers the best investment plans for a monthly income that seeks to generate regular income through investments primarily in debt and money market instruments. As a secondary objective, this best investment scheme for monthly income also seeks to generate long-term capital appreciation from the portion of equity investments under the Scheme. However, there can be no assurance that the investment objectives of this investment scheme for monthly income will be realized.
6. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
PMVVY is one of the best investment plans for monthly income for senior citizens aged 60 years and above to provide them with an assured return of 7.4 percent per annum. This is one of the best investment options for a monthly income that offers pension income payable monthly, quarterly, half-yearly, or yearly as opted. The minimum pension amount in this best investment scheme for monthly income is Rs 1,000 per month and a maximum of Rs 9,250 per month. The maximum amount that can be invested in this best investment plan for monthly income is Rs. 15 lacs. The tenure of this investment plan for monthly income is 10 years. This investment scheme for monthly income is available till March 31, 2023. At maturity, the investment amount is repaid to the senior citizen. In the event of the death of a senior citizen in this best investment plan for monthly income, the money will be paid to the nominee.
7. Fixed Deposit
Undoubtedly, one of the best investment plans for monthly income and most low-risk income schemes is a bank Fixed Deposit (FD). In this best investment scheme for monthly income, you invest a certain sum of money for a fixed period until which you accrue a monthly interest income on your deposit. The rate of interest in this investment plan for monthly income depends on the tenure of your FD. Usually, most banks offer around 8-9% interest rates on FDs. However, this rate may further scale up shortly, making FD a more appealing option for individuals who have a low-risk tolerance quotient.
8. Franklin India Debt Hybrid Fund
It is one of the best investment plans for monthly income and an open-ended scheme. Franklin India Debt Hybrid Fund majorly invests in debt funds and 25% of maximum investment is made inequities. The main objective of the fund is to generate regular income from the fixed income market by managing the fund’s portfolio actively. This best investment plan for monthly income is best suitable for individuals who want to make a long-term investment and who want to gain regular income along with the benefit of capital appreciation.
9. IDFC Regular Savings Fund
This is an open-ended hybrid scheme and the best investment plan for a monthly income that predominantly invests in debt and monthly market instruments. Under this best investment scheme for monthly income, a part of the portfolio is also invested in equity and equity-related instruments to provide capital appreciation to the investors over a long period. Under this fund option, 24% of the investment is made in equity instruments which include large-cap, mid-cap, and small-cap stocks, and 49.79% of the asset is invested in debt instruments. As a low-risk investment option, this investment plan for monthly income is best suitable for investors who want to avail regular income along with the benefit of capital appreciation in the long term.
10. Kotak Debt Hybrid Fund
This is one of the best investment options for monthly income and the major objective of this best investment plan for monthly income is to enhance returns by investing in debt instruments with a moderate exposure in equity and securities related to equity. Under this best investment scheme for monthly income, the investment is made in a mix of high credit debt funds and money market instruments. As only 24% of the asset is invested in equity instruments, this investment scheme for monthly income reduces the risk and result in optimum return. Under this fund option, 24.49% of the investment is made in equity instruments which include large-cap, mid-cap, and small-cap stocks, and 75.53% of the asset is invested in debt instruments. Kotak Debt Hybrid Fund is best suitable for individuals who want to earn a regular income and has a moderate risk appetite.
11. Reliance Hybrid Bond Fund
This is the best investment plan for monthly income to generate a consistent return to the investors along with the benefit of capital appreciation by investing in a mix of securities comprising, equity and equity securities and fixed income instruments. Under this fund option, 12% of investments are made in stocks that comprise large-cap and mid-cap stocks and 83% of investments are made in debt and low-risk securities. This plan is best suitable for individuals who have a high-risk appetite and who want to gain regular returns along with the benefit of capital growth in a long-term period.
12. Sundaram Debt Oriented Hybrid Fund
This is one of the best investment plans for a monthly income that aims to generate regular income and capital growth by making investments majorly in fixed income securities and equity and equity-related securities. These type of investment plans for monthly income are consistently performing good in the market and best suitable for individual who wants to have a regular flow of income along with the benefit of capital growth in a long-term period. In this best investment scheme for monthly income, 24% of investment is made in equity and equity-related instrument, and 68.82% of investment is made in debt and low-risk securities.
Best Monthly Income Plans for 2023
| Plans for monthly income | Entry Age | Maturity Age | Policy term | Premium paying term | Sum Assured |
| Aditya Birla Sun Life Insurance Monthly Income Plan | 18-55 yrs | 80 yrs | 20-37 yrs | 10/12 yrs | · Min. Rs.4,00,000
· For entry age 51-55 yrs – min. sum assured will be Rs.6,00,000 |
| Aviva Income Suraksha | 18-48 yrs | 65 yrs | It will be the same as the premium payment term and deferment period | 10/12 yrs | · Rs.6,84,000 (For entry age 18-40 yrs)
· Rs.1,140,000 (for entry age Rs 41-48 yrs) |
| Bajaj Allianz Life Income Assure | 0-50yrs | 74 yrs | 17, 19, 22 and 24 yrs | 5, 7, 10 and 12 yrs | 144* Minimum monthly guaranteed income chosen |
| Bharti AXA life Monthly income plan plus | · 3-65 yrs (For 15 yrs policy term)
· 0-60 yrs (for 20 yrs policy term)
· 0-50 yrs (For 30 yrs policy term)
|
80 yrs | 15, 20, and 30 yrs | 7, 10, and 15 yrs | · Rs. 1,92,000 (For 15 yrs policy term)
· Rs. 2,10,000 (For 20 yrs policy term)
· Rs. 1,35,000 (For 30 yrs policy term) |
| Smart Monthly income plan | 18-55 yrs | 80 yrs | 25 yrs | 15 yrs | 100x of the opted monthly income |
| Edelweiss Tokio Life Zindagi Plus | 18-65 yrs | 80 yrs | · Regular Pay – 10 yrs
· Pay till 60-15 yrs
· Up to 62 yrs |
· Regular Pay – Same as the policy term
· Pay till 60-60 minus entry age +1 yrs |
· Rs. 25,00,000
· In case of top-up benefit or Better half/ life stage benefit is chosen then Rs. 50,00,000 |
| Exide Life Guaranteed Income Insurance Plan | 3-55 yrs | 85 yrs | 16, 20, 24 and 30 yrs | 8, 10, 12, and 15 yrs | Rs. 90,978 |
| Future Generali Assured Income Plan | · 7-50 yrs (For 11 yrs policy term)
· 5-50 yrs (For 15 yrs policy term) |
65 yrs | 11/15 yrs | 11/15 yrs | 17.5 time the annual premium |
| HDFC Life Super Income Plan | 30-59 yrs | 75 yrs | 16-20 yrs | 8, 10 and 12 yrs | Rs.12,8,337 |
| ICICI Pru Cash Advantage | 0-60 yrs | 80 yrs | 15, 17 and 20 yrs | 5,7 and 10 yrs | – |
| IDBI Federal Life Insurance Guaranteed income Plan | 8-50 yrs | 60 yrs | 10 yrs | 5 yrs | Depends on age, tenure, and premium amount |
| IndiaFirst Life Guaranteed Monthly Income Plan | 18-50 yrs | 75 yrs | 16-27 yrs | 8, 9, 10 and 11 yrs | Rs. 75,000 |
| Kotak Premier Income Plan | 3-55 yrs | 78 yrs | 15, 19, or 23 yrs | · 8 yrs (For 15 yrs term)
· 10 yrs (For 19 yrs term)
· 12 yrs (For 23 yrs term) |
Depending on the premium paid, age, gender policy premium term, and policy term. |
| Max Life monthly Income Advantage Plan | 18-55 yrs | 75 yrs | 18, 22, or 25 yrs | 8,12 or 15 yrs | · Rs. 2,16,000 (For 8 pay variant)
· Rs. 3,24,000 (For 12 pay variant)
· Rs.4,05,000 (For 15 pay variant) |
| PNB Metlife monthly income plan-10 pay | 18-55 yrs | 65 yrs | 10 yrs | 10 yrs | Annualized premium*11 |
| Pramerica Life Family Income Plan | 18-55 yrs | 65 yrs | 5-30 yrs | Same as policy term | Depending on premium paid |
| Reliance life increasing income insurance plan | 14-60 yrs | 80 yrs | 15, 16, 20 and 24 yrs | Half of the opted policy term | · Rs. 60,000 (For entry age up to 44 yrs)
· Rs.1,00,000 (For entry age up to 45 yrs) |
| SBI Smart Money Planner | 18-60 yrs | 75 yrs | 15, 20, and 25 yrs | 6 and 10 yrs | Rs.1,00,000 |
| Shriram Life Assured Income Plan | 30 days -55 yrs | 70 yrs | 8, 10,12 and 15 yrs | 8, 10,12 and 15 yrs | Rs, 1.2 lacs |
| SUD Life’s Elite Assure Plan | 20-50 yrs | 71 yrs | 15 yrs for plan 5-5-5
21 yrs for plan 7-7-7 |
5 yrs for plan 5-5-5
7 yrs for plan 7-7-7 |
11 times the annualized premium |
| TATA AIA Life Insurance Guaranteed Monthly Income Plan | · 13 – 60 yrs (For 5 yrs policy term)
· 10-60 yrs (For 8 yrs policy term)
· 6-67 yrs (For 12 yrs policy term) |
· 65 yrs (For 5 yrs policy term)
· 68 yrs (For 8 yrs policy term)
· 67 yrs (For 12 yrs policy term) |
5,8, and 12 yrs | 5,8, and 12 yrs | 11 times the annualized premium |
Monthly Income Plans Vs Debt Product
| Criteria | MIP | FD | Post Office Monthly Scheme | Fixed Maturity Plan |
| Average Return Rate | 6-12% | 7-8 % | 8% | 9-10% |
| Risk Involved | Low Risk | No | No | Low Risk |
| Assured Monthly income | No | Assured | Assured | Not Available |
| TDS | No | Yes | No | No |
| Complexity | Moderate | Easy | Easy | Moderate |
| Max Limit | No limit | No limit | · Rs.4.5 lacs for a single account
· Rs.9 lacs for joint account |
No limit |
| Early Withdrawal Penalty | 1% | 1% less interest will be paid | · Before 3 yrs- 2%
· After 3 yrs – 1% |
0-2.5% |
| Tax on return | Before 1 yrs- As per your tax slab
After 1 yrs- 10% or 20% with indexation
|
As per your tax slab | As per your tax slab | · Before 1 yrs- As per your tax slab
· After 1 yrs- 10% or 20% with indexation
|
Benefits of Monthly Income Plan
1. No Limit
The best investment plan for a monthly income is flexible and does not come with an upper limit on its investment amount. The best investment options for a monthly income allow someone to invest in the scheme as per their capability and requirement.
2. Open-ended option
The investment plans for monthly income are open-ended schemes. Individuals do not have to pay any processing charges as an entry load for entering the said scheme. Additionally, the best investment plans for monthly income come with an exit-load that is less than 1% of the total sum of investment. Liquidity: An MIP scheme is more liquid when compared to most other schemes. As there is no lock-in period applicable on the investment, investors can choose to withdraw their investment schemes for monthly income to meet any unforeseen emergency.
3. Better Returns
Earnings generated through a MIP are better than that of traditional fixed deposits and Post Office Monthly Income Scheme.
4. Guaranteed Regular Income
Investors are guaranteed to earn assured returns each month, despite the quantum of the sum varying depending on the financial market.
5. Lower-Risk
MIPs are associated with the lower-risk component. The best investment plan for monthly income is because money is invested in low-risk securities like preferred shares, fixed-income instruments, and dividend stocks.
6. Professionally Managed
MIP is managed by professional fund managers who are better equipped to understand the functioning of the investment market. These best investment plans for monthly income not just monitor schemes but also decide all the ‘when, how, and how much when it comes to switching funds to debts and equities.
Types of Monthly Income Plan
1. Dividend-oriented monthly investment plan
The earnings generated through such the best investment plan for monthly income are in the form of dividends. No tax is levied on the dividend paid to the individuals. Such dividends are paid from the distributable surplus by the AMC and are paid when the said fund is earning profit from the market.
2. Growth-oriented monthly income plan
Through this best investment plan for monthly income, earnings accrued on the capital get added to the invested amount. These best investment plans for monthly income facilitate wealth creation along with corpus growth.
Best Investment Plan for Monthly Income – FAQs
Q1.What investment will give me monthly income?
Ans. Money market accounts and certificates of deposit (CDs) are very safe investments that can be used for monthly income. Both are insured by the Federal Deposit Insurance Corporation (FDIC), which means you’d get your money back (subject to FDIC rules and limits) if your bank went bankrupt.
Q2. Can I do FD for 1 month?
Ans. The maturity term of a short-term fixed deposit ranges from 7 days to less than 12 months. You can deposit money in such a term deposit only once. You can opt to renew the short-term fixed deposit account when it matures. The tax on the funds in the account can be deducted as per the Income Tax Act, 1961.
Q3. Which bank is best for monthly income?
Ans.1. Kotak Mahindra Bank
- IDFC First Bank
- Bank of Baroda
- Union Bank of India
- Federal Bank
