If you are looking for monthly income plans, there are a number of options. You have the mutual fund schemes, post office scheme and also company fixed deposits to choose from. We have written about options from all these three investment alternatives and have given you a few monthly income options below. Here are a few of these. Remember, the tax implications on some of the MIPs before you invest.
Bajaj Finserv offers you an interest rate of 7.35 per cent on a monthly basis, if you place your investment for 12-23 months. On the other hand if you place your deposits for 24-35 months, the firm offers you an interest rate of 7.53 per cent.
A 36-60 months deposit fetches you an interest rate of 7.58 per cent, with interest on a monthly basis. The deposits are AAA rated, which means they are relatively secure.
The rates of interest are much better then bank deposits and you could consider them for the very long term as well. Go for them if you are a retired individual who is looking for regular monthly income.
We are not recommending long term tenures for investment, given the fact that we expect interest rates to reduce going forward.
HDFC Monthly Income Plans
HDFC too offers you interest rates at monthly disbursals. The interest rate on a 15 month deposit is 7.25 per cent, while the 22 month deposit fetches 7.30 per cent and the 30 month deposit fetches 7.25 per cent interest.
If you are looking for a slightly longer term tenure of 44 months, you get an interest of 7.30 per cent. The deposits are AAA rated and are relatively secure. If you are looking at long term monthly income, these could be very good deposits. The deposits are highly rated and are hence very safe.
You may get higher yields in debt dedicated funds, though in terms of safety, HDFC Monthly Income Plans would be better.
Franklin India Monthly Income Plan
This is a debt dedicated mutual fund that can offer you decent returns. Most of the funds of the plan have been invested in government securities. Interestingly, the three year returns from the plan have been almost 8.80 per cent, which beats the returns from bank deposits.
Bulk of the money is invested in safe government securities, though the fund also has holding in shares of State Bank of India, HDFC Bank and others.
The returns of the fund since launch has been a decent 10.18 per cent.
UTI Monthly Income Scheme
This fund last declared a monthly income of 0.0578 per unit. This means on an NAV of Rs 12.34, your returns could be slightly under 7 per cent.
However, the fund does have exposure to stocks, which means the returns from UTI Monthly Income Scheme can go higher if stocks rally. Higher interest rates may also push returns higher since the fund has a larger exposure to debt.
The returns of the last 5 years has been closer to 10 per cent, which is not a bad bet at all. The company's debt exposure include to names like Reliance Utilities and Power Afcon's Infrastructure etc.
Monthly Income Plan of Post Office
The interest rates on the post office monthly income scheme is much better then some bank deposits. The interest rate currently offered is 7.70 per cent. Since these deposits are backed by the government, they are also relatively safe.
These deposits can be en-cashed earlier, after one year but before 3 years at the discount of 2% of the deposit and after 3 years at the discount of 1% of the deposit.
DHFL Monthly Fixed Deposits
This has to be the best bet when it comes to fixed deposits. If you place the deposit for a tenure that ranges from 12 to 120 months, you get an interest rate ranging from 7.40 to 7.65 per cent, depending on the tenure.
However, it is advised not to go in for the longer term deposits as you would lose if interest rates in the economy rise.
Taxation on these plans
It is to remembered that there is a tax liability that would arise on these FDs. There is a TDS that is liable to tax that would emerge in case the amount of interest exceeds Rs 10,000 on the TDS amount. In case you are not liable to pay tax, the best thing that you could do is submit form 15g and form 15h. There are a few more best monthly income plans that you may look at, but some of them are a bit risky. Mutual Fund MIPs are also good, but, however, they could end-up investing partial amounts in equity. They can increase your returns or could even reduce the same.