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Fixed monthly income options are usually considered by individuals who are close to getting retired or have already retired. It is so because senior citizens or investors without a stable and steady source of employment often wish for a fixed source of stable income which is also safe. Here are five monthly income options to look at in these uncertain times:
Post Office Monthly Income Scheme (POMIS)
POMIS is a government-backed retirement scheme that promises fixed and guaranteed returns to investors. This low-risk investment option offers stable and good returns. Hence, it is ideal for conservative investors or senior citizens who have a low-risk tolerance. POMIS schemes have a lock-in period of 5 years, and any Indian citizen can invest in them. You should not consider investing in POMIS if you are looking to save tax as these schemes do not offer any tax exemption.
Public Provident Fund (PPF)
PPF is a government-backed, tax-saving investment that offers a pre-determined rate of interest. Currently, PPF schemes provide an interest rate of 7.1% p.a. The interest rates are revised by the government each quarter. It is a widespread investment option owing to the combined benefits of returns, tax-saving attributes, and safety. All Indian citizens are eligible to invest in these schemes. PPF schemes have a mandatory lock-in period of 15 years. However, investors can make a partial withdrawal after six years. These schemes fall under the EEE (Exempt-Exempt-Exempt) category, wherein the interest earned, principal amount and the maturity amount is entirely exempt from tax.
Fixed Deposit (FD)
Bank fixed deposits are one of the safest investment options available to Indian investors. These investment havens are offered by banks and other NBFCs (non-banking financial company) that allow investors to receive a fixed rate of interest. Fixed deposits are a boon to investors which are spread across varying age group and income levels. FDs are unaffected by market fluctuations, which ensures superior safety of the capital. Returns on FDs are pre-determined, and there is minimal risk to the capital. However, it must be noted that these investment options are accompanied with a lock-in period. The interest earned on FDs are taxable, but investments of up to Rs 1.5 lac are exempt u/s 80C of the IT Act.
Senior Citizen Savings Scheme (SCSS)
SCSS is a government-sponsored scheme offered to Indian investors who are above the age of 60. The Government of India introduced this savings scheme intending to provide a secure and steady source of income to retired investors. The maturity of this scheme is five years; however, it can be further extended by three years. The interest rates on SCSS schemes are declared during the time of investment. The interest rate remains the same throughout the investment tenure and is unaffected by any subsequent alterations. SCSS schemes provide one of the highest interest rates against other savings-oriented investments.
Mutual Fund SWP
Systematic withdrawal plans (SWP) allows investors to earn a regular income from their mutual fund investments, similar to other MIS schemes. With the SWPs, investors can state a particular fixed monthly payout which is further paid on the designated date by redeeming the units of the desired mutual funds. SWP investments come with both the dividend and the regular option. However, the dividend payout does not offer fixed returns. The dividend option relies on market movements and fund performance. Owing to the several benefits of investing in mutual funds, you can consider SWPs if you are looking for fixed monthly payouts.
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