How to Secure a Stable Monthly Income with the Best Investment Options

Last Updated: 28 Oct 2024

In today’s world, everybody wants financial security; therefore, a continuous flow of income is necessary to live a healthy life. Whether you are searching to supplement your earnings or are approaching retirement, the best investment plan for monthly income will let you achieve your goals. However, with several best investment options available in India, it may need clarification for people where exactly they should invest their hard-earned money.

This comprehensive guide explores the best investment plans for generating monthly income in 2024, breaking down each option to help you make an informed choice.

Best Monthly Income Plans You Should Consider

Here are the top monthly income plan options you can explore to generate a steady income:

1. Senior Citizen Saving Scheme (SCSS)

Senior Citizen Savings Scheme is only a Government-backed scheme for senior citizens above the age of 60 years. It carries a very attractive annual interest rate of 8.2% p.a., payable every quarter. The tenure for this scheme is for five years and one can invest a maximum of Rs 30 lakh in this scheme. Since it is a government-backed scheme, it is considered secure under risk-free investment. It also offers tax benefits of up to Rs 1.5 lakh under section 80C of the Income Tax Act, 1961.

2. Post Office Monthly Income Scheme (POMIS)

Government-backed monthly income scheme, POMIS, fetches an interest rate of 7.4% per annum, payable on a monthly basis. Moreover, this avenue offers five-year tenure. Individuals can invest a maximum amount of Rs 9 lakh in a single account, while the limit is Rs 15 lakh for joint accounts. It is amongst the top investment avenues for those seeking a regular and low-risk source of income.

3. Long-Term Government Bonds

Among other low-risk investment opportunities in the field of bonds, there are Government Bonds, where you have the opportunity to earn a month-to-month income. These may last anywhere from 5 to 40 years. The interest is paid out monthly by the government, but also because it has fixed maturity dates, you know exactly when to expect your return of capital.

4. Corporate Deposits

Corporate deposits are similar to bank fixed deposits but are issued by non-banking financial companies (NBFCs). Although they carry a slightly higher risk, they offer attractive interest rates compared to traditional bank FDs. Before investing, research the company’s financial health to ensure safety.

5. Monthly Income Plans (MIPs)

They are basically schemes of mutual funds that primarily invest the majority of their money in fixed-income securities, with the smallest portion invested in equity. Monthly income plans provide regular dividends, though these are not assured returns; these are subject to the performance of the market. It’s a great avenue if you have moderate risk tolerance and want a mix of stability and potential growth.

6. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The PMVVY has been specifically designed for senior citizens, assuring an interest rate of 7.4% per annum, with monthly, quarterly, and annual mode of payouts. The policy duration is 10 years and thus provides a regular monthly income, which is secure and reliable for the retirees.

7. Life Insurance Plus Savings

Life insurance policies combined with savings components can offer a predetermined monthly payout after maturity. This is not only a source of regular income but also provides financial security to your family in case of an unforeseen event.

8. Systematic Withdrawal Plans (SWPs)

SWPs are facilities through which fixed amounts can be availed from your mutual fund investments periodically. By your choice, the periodicities-monthly, quarterly, or annual-can be so fixed to suit your needs for living expenses. This happens to be one of the most versatile excellent investment plans that yield regular income.

9. Equity Share Dividends

Equities paying regular and decent dividends can also prove to be excellent monthly income generators, provided you are comfortable with high-risk investments. Though dividends are paid out of the profits of the company, one may have reasonable assurance of regular income from a diversified portfolio of high dividend-paying stocks in addition to attractive capital appreciation.

10. Annuity Plans

Annuities are those kinds of investments whereby, in return for a single lump sum, the investor receives a steady monthly return. In some cases, annuities allow the investor to decide between an immediate annuity and a deferred annuity. The immediate annuity begins paying immediately, while the deferred annuity may take a few periods before it begins paying. Annuity returns are fairly stable; however, most annuity investments often carry higher fees and are subject to taxes.

Factors to Consider Before Investing in a Monthly Income Plan

Before starting any type of monthly income plan, a necessary amount of ideas is required concerning one’s financial needs, the risk-taking capability, and market conditions. Therefore, here are a few important factors to consider:

1. Market Conditions:

Keep track of the prevailing interest rate and when the interest rate is high, some schemes such as government bonds and fixed deposits are offering a good return.

2. Your Risk Appetite:

Your comfort with the element of risk becomes very significant in determining the best plan for investment in your case. So, while certain options like SCSS and POMIS happen to be totally low-risk in nature, some options, such as equity shares and corporate deposits, might be offering higher returns but are much more risky.

3. Liquidity needs:

When do you need access to your money? Some investments tie you in for a fixed period, while others, such as SWPs, are considerably more flexible.

4. Tax Implications:

These investments invariably need to be considered for their taxability, as in the case of interest from SCSS, which is taxable, with equity dividends being tax-free up to a certain limit.

5. Investment Horizon:

Whether you are after short-term or long-term income will also impact your decision. Government bonds and annuities are best for the long-term investor, while mutual funds and SWPs offer more flexibility.

Conclusion

While choosing the best investment plan for monthly income in 2024, you must be very particular about your financial goals, risk appetite, and the duration of your investment. Whether low-risk government-backed options or higher-risk best investment options, there is something for everyone. The idea is to take the time to evaluate your needs and diversify your investments so that return streams are not only steady but also reliable.

Frequently Asked Questions

Which investment plan is best for monthly income in India?

The best investment plan for monthly income in India would depend upon your risk appetite, age, and financial goals. Some of the good options include the Senior Citizen Saving Scheme, Post Office Monthly Income Scheme, and Systematic Withdrawal Plans. 

Is it possible to invest in more than one monthly income scheme?

Yes, diversification of a portfolio by investing in various best investment options is good. It spreads the risk and assures regular income from different sources.

How safe is a monthly income plan?

Most monthly income plans, such as government bonds and SCSS, are safe since they are backed by the government. However, options such as corporate deposits and equity dividends come with a higher amount of risk and must be treated with care.

How much can I earn monthly from these plans?

The monthly income you earn depends on the amount invested and interest rate offered by the scheme. As an example, an investment in POMIS offers 7.4% annually, so for an investment of Rs 4,50,000 you could earn approximately Rs 2,775 per month for a 5 yr lock in period.

Do monthly income plans offer assured returns?

Whereas some plans, like SCSS and PMVVY, yield a guaranteed return, investments with mutual funds and corporate deposits will only vary based on the performance of the market.