A monthly income scheme (MIS) is a financial instrument where individuals can park their money to generate a steady monthly income over a certain maturity period. It is best for risk-averse individuals looking for a safe instrument as an investment option.
By investing in monthly income schemes, individuals can earn in the form of dividends or interest, depending on the nature or type of the instrument of investment.
Here is a look at what this MIS scheme is and how individual investors can benefit from it.
What is a monthly income scheme?
When individuals invest in a monthly income scheme, their money stays invested in different funds. These investment instruments can be debt funds, bonds, fixed deposits, etc. The risk and returns for different monthly income schemes can vary as the investment instruments are not the same across.
While investing in a monthly income scheme, individuals need to bear in mind that the earning per month is not stable or guaranteed. This is so because the return or profit on investment depends on the performance of the instrument of investment.
What are the key features and benefits of monthly income schemes?
Following are the different features and benefits of monthly income schemes:
It helps individuals to get an earning every month, which they can use to bear any of their small-ticket expenses.
Senior citizens can invest in certain schemes to enjoy fixed earnings as pension. It will help enhance their financial security.
Individuals can invest in a monthly income scheme with a small amount starting from Rs.1,000.
What are the different types of monthly income schemes?
To get the benefit of monthly income, individuals can invest their funds in different plans or schemes as mentioned below:
Monthly income fixed deposit
Individuals finding one of the best monthly income schemes can go with a fixed deposit as their selected instrument of investment. To enjoy the income at the end of every month, they will have to choose the non-cumulative monthly payout option. The financial institution will deposit a guaranteed amount to the savings account of investors every month.
There are two ways individuals can invest in a monthly income fixed deposit. They can either book their fixed deposits(FD) by paying a lump sum amount or pay a certain amount every month for a certain period.
Systematic Deposit Plan
For monthly investments, individuals can opt for the Systematic Deposit Plan (SDP) offered by Bajaj Finance. With small regular deposits, you earn monthly income on your investments. With the SDP - Monthly Maturity Scheme, investors start making deposits from Rs. 5,000 for a particular tenure. Each deposit acts as a separate FD and offers returns based on the prevailing FD rates on the date of deposit.
Each investment is made for the same tenure and matures in a different month. Thus, you can enjoy a monthly income after a certain period as determined when buying the scheme. By visiting the website of the preferred financial institution, individuals can easily invest in FD or SDP from the comfort of their homes.
Senior citizen fixed deposit
Senior citizen fixed deposit are term deposit plans offered by Bajaj Finance to customers above 60 years of age. With a non-cumulative fixed deposit, senior citizens can now earn returns up to 8.60% p.a. The non-cumulative FD allows you to invest between Rs. 15,000 to Rs. 5 crore, and get interest payout at monthly, quarterly, half-yearly, or yearly basis. Seniors can benefit from a constant and reliable income stream in their post-retirement years with the regular interest payment option.
Mutual funds having systematic withdrawal facility
There are certain mutual funds, which allow individuals to withdraw a certain amount of money on a periodical basis. It can be monthly, quarterly, semi-annually, or annual. By selecting a monthly withdrawal period, they can ensure a fixed earning after every month.
Who should invest in a monthly income scheme?
Individuals can invest in this monthly income scheme if their motive is as mentioned below:
A monthly income plan is ideal for individuals who want a regular stream of income.
Retirees can invest in these plans to secure an income to support their small expenses.
Individuals intending to diversify their portfolio can also invest in some monthly income plans like fixed deposits with non-cumulative payouts.
A monthly income scheme helps individuals enjoy interest every month from their deposits. They can leverage these earnings to meet their basic household expenses and, supplement their monthly income. Senior citizens can also deem this earning as their monthly pension.