If you are looking for monthly income return by investing one time & expecting a return better than Fixed Deposits without taking much risk, then the solution to all your anxieties is Monthly Income Plans (MIP).
Monthly Income Plans are hybrid investment options which invests majority of their portfolio holdings in debt oriented instruments like Government securities, bonds, certificates & around 20-25% of their holdings in equity oriented instruments. Through this plan, one can choose to opt for monthly, quarterly or yearly dividends though fund managers prefer to focus on disbursing monthly dividends as per the name suggests.
The very important question in every investor’s mind-Are Monthly Income Plans are risk free. In one word, I can say “NO” If you are looking for ultra low risk or without risk instruments, then don’t think twice, go to a bank & enjoy 8% returns & sit at home.
But if you are looking for 12% returns by investing 25% of the Portfolio in equities & that too managed by professional experts, look for Monthly Income Plans.
Dividend Income earned on Monthly Income Plans are tax free in the hands of investor but the Dividend distribution tax is payable on MIP which is already adjusted in NAV itself, where as interest earned on Fixed Deposits is taxed. Now-a-days, banks are deducting TDS of 10-20% out of interest income earned in FD. So you had to again get into the stuff of Income Tax Refund.
There are three types of Monthly Income Plan. Monthly Income Plans offered by
Monthly Income Plans do have an exit load if a investor withdraws his Investment within one year whereas Monthly Income Plan doesn’t attract any load for investors who want to invest for more than one year.
If your Age is above 45-50 & ready to take little more risk than debt instruments or Fixed Deposits or if you are a Retired professional, then Monthly Income Plan is the best suited product for you. A person who is nearing retirement can opt for Monthly Income Plan also. But if you have a young blood & your risk appetite is quite high, then you may opt for a balanced fund & choose Growth option or go in for an Equity Diversified Fund.
– This article has been provided by Mayank Gupta, founder at wealth management company WealthBazaar.
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No dancing shoes ,after 65 years of age are recommended!!!!!Play the market, invest in shares/Company deposits/Mutual funds etc from 20-65 years of age; therafter, park it all in a 10% bank deposit and laugh your way to the bank !!!! i have actually seen gentlemen of 80 years distributing money; saying they dont know what to do with the excess.
avoid worry stess and enjoy the simple things of life. That alone will keep you healthy and stress free after 65.
Other views welcome.
ajay mehra
I have sixty thousand in hand and want to create another source of income.
I have only source of income is monthly salary. i am thirty year old. I would like to invest in MIP to create another souce of income. what is your opnion on this?
Hi AGB,
If you are looking to invest in MIP, you may look to invest in HDFC MIP-LTP & you can expect 12% returns on a yearly basis, if invested for 3 year horizon. I hope I am able solve your query
http://www.wealthbazaar.in
Thanks for your response Mayank.
you are referring the growth option or divedend option?
what about reliance MIP?
Always always go for growth option in mutual funds or rather any investments. because the compunding takes place much effectively. I would also suggest you to invest in parts in equity & balanced mutual funds. Pankaj is a good financial planner also
http://www.wealthbazaar.in
the reason i prefer to invest in MIP is because, i need monthly income. otherwise i would prefer to invest in any diversified equity fund, which will give much better returns.
Then MIP IN HDFC MIP is a good option or also look at investing in FMPs
tats.........vry good know for all of us.........we all should be careful while doing this........
Hi Pankaj,
I am 26 year old and my monthly salary is 36K.I want to know some good monthly income plan.
@Koushik
You can choose from Birla Sun Life MIP II Savings 5, HDFC MIP Long-term and Reliance MIP
HI I want to invest some amount around 5-10K monthly. Is SIP is good to invest ot MIP?
Please suggest some plans .. I am 30yr old and if monthly some amount comes as returns that will be good..
thanks
Supraja
@Supraja
As age is on your side, if you don't need the invested amount for atleast next 5-6 years, it will be wise to invest in other forms of mutual funds like equity or balanced.
@ Supraja,
Looking at your age being 30, you can look to invest in mutual funds through SIPs as monthly income plans doesnt take the advantage of power of compunding. You can expect 16-17% annualised returns from mutual funds if invested for more than 5 years. Also review your mutual funds every year
Hi, I have an SIP Reliance Growth & Birla Sunlife ELSS. Would like to increase my investment in MFs through SIP. Can you recomend some funds? I am 31 years ols & the mount of SIP currently it is 1K monthly in each.
@Sujit
Investment in mutual fund should be on the basis of your needs and appetite.
Please go through following pages and you will have some clarity:
http://www.socialfinance.in/questions/911/pgolla-need-best-suitable-mutual-funds-to-invest-large-amounts
http://www.socialfinance.in/questions/1607/mutual-fund-investment-and-sip
Dear Sir, I have LIC with premium of R.4,60,000/year. and house hold expenses of Rs.25,000/month. I am looking for regular incom scheme which can take care of above. I am ready to make one time payment which can give returns of above amount. Pls suggest.
@Ravikiran
Please don't put your hard earned money into LIC for investment purposes. Don't invest into insurance policies.
If you need regular income, better to put into a mix of debt and equity based investments.