Government bonds come with a predefined maturity date. The main intention of issuing government bonds is to raise capital for government expenses. These are similar to bank deposits, but the only difference is that you invest with a corporate entity, which is not as secure as a bank. Before making investments in corporate deposits, you must check for the financial strength and credibility of the NBFC. Monthly income plans MIPs are mutual fund plans.
The fund houses payout their investors with an amount monthly. This amount is not fixed and varies as per the performance of the fund. Since the performance drives the returns, therefore, it is never guaranteed. Also, there are possibilities of negative returns as well.
Hence, before deciding to invest in a monthly income plan, you must consider your profile. If not, then you might burn your hands with these. If you are a senior citizen, then senior citizen savings scheme SCSS is a great investment option. This can be considered an absolutely risk-free scheme and only senior citizens above the age of 60 years are eligible to invest in this. You can avail this scheme at notified banks and post offices. You must subscribe to the scheme within one month after retiring.
There may be several investment options that offer monthly income, but the ones mentioned above are the best. It will help if you choose plans that suit your risk profile and requirements. As the fear of outliving retirement savings becomes all the more common, several investment options have started offering a monthly income for you to fund regular expenses. Such companies provide interest on a quarterly or half-yearly basis, and you can also choose to get returns for any four months in a year.
They come with additional interest rates falling between 0. It is important to remember that there could be a slight risk of delay in payment or default from such companies. In order to diversify the risk, you can distribute your money into deposits with multiple companies, which will also help ensure you receive income for every month of the year. For investors seeking the right balance of returns and safety of their deposits, Bajaj Finance Fixed Deposit is a great investment option offering attractive higher FD rates of up to 6.
For those investors with a zero tolerance for risk and hopes of earning continuous income, the Post Office Monthly Income Scheme is one of the best available options. The interest is paid at 7. Although the maturity period for this scheme is 5 years, you can withdraw earlier if you complete one year of deposit. The post offices in India offer a special investment scheme for people aged 60 or above, which is called a senior citizen savings scheme. It is another type of risk-free instrument that can offer significant returns.
An interest rate of 7. As another low-risk option with good returns, a long-term government bond pays interest once or twice a year. You can club it with the other investments to earn income all year round. Since they are traded on the secondary market, you can sell them whenever you wish. However, the catch is that you must lock-in your funds for a considerably long tenure which can go up to 15 or 20 years. This option allows for investment gains over the long term along with the promise of a regular income, but the risk factor is very high.
You are required to build a diverse portfolio including multiple stocks to facilitate a high dividend payout ratio. Since you receive dividends on profits and not on capital, there is a greater-than-average possibility of companies not paying regular dividends. Indian insurance companies are known to offer annuity plans that offer low risk and a regular income. You can use this as a retirement strategy by making a lump sum investment to earn income at fixed intervals.
The primary method of classifying annuity plans is based on the duration of payment period, and is divided into Deferred annuity and Immediate annuity. Deferred annuity provides money after a fixed tenure period set by you, while Immediate annuity involves receiving regular income as soon as you make the lump sum payment. Keep in mind, however, that there are various charges involved in annuity investment, which include commission and surrender fees.
It is also taxable and does not yield any tax benefits. This plan is ideal for beating inflation, provided you are ready to take a moderate amount of risk. A good tenure for this plan is between 2 to 3 years, and you can receive monthly income by selecting a dividend-payout option. However, the equity component makes it difficult to acquire regular dividends because dividends are only paid on profits, and not the invested capital.
While each of these investment avenues can suit the needs of different investors, there is always a risk-return conundrum that makes most investors prefer the convenience of investing in a Fixed Deposit. As a preferred investment avenue, a Fixed Deposit offers a great balance of low-risk and attractive returns. Plan your finances with care and invest in a FD Fixed Deposit by Bajaj Finance, where you can get high interest rates, flexible tenures and assured returns.
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Plus the returns on maturity are exempt under section 10 10D. Investments are focused on generating returns and thus carry a higher risk. Whereas insurance is for protection of life and assets in case of loss and death. I have written a guide on best ways to save income tax in India.
All the equity investments carry higher risks and hence are also capable of generating very high returns. The last 1-year return of NSE is Likewise, shares of blue-chip companies have delivered huge returns in the near past. To invest in equity, you need a Demat account.
You can read the full reviews of my favorite Demat accounts. Mutual funds are the safest and the most convenient way of investing in the markets when you do not have the time and expertise. The equity mutual funds have generated consistently higher returns. Commercial real estate provides rental income and capital appreciation.
The higher appreciation is due to demand for office space and growth of corporate environment. But the location, building quality, market space rent and the demand-supply plays a major factor in deciding returns. A good investment in office and shop spaces not only fetches higher returns but also helps in diversification of investment assets.
The best part of investing in IPO is that the money gets blocked only for 7 to 15 days. FDs are the safest and secure investment options provided by banks and post offices which earn higher interest rates than a savings account. Any excess amount which you are not going to use for a certain period of time can be safely put into a fixed deposit. RD let you invest any amount which can be as small as Rs.
You may also like to read — how to do forex trading in India. The option carries the least amount of risk and is for persons who have idle money for short period of time. Unlike, liquid MF the money is invested in bonds and other instruments with maturity more than 91 days and less than 1 year. Ultra ST debt MF does carry interest rate risk, are not so liquid and hence gives you higher returns. The sweep in option lets you enjoy flexibility in managing your savings and also enjoy higher returns from a fixed deposit.
Here, any excess money lying in your savings account, above a particular threshold level gets automatically converted into a fixed deposit and vice versa. Also read — Best discount broker in India Returns on a 3-year FDs vary from bank to bank, usually in a range of 6. Also there are no associated tax benefits in this investment option. Equity is the best option for persons looking for growth and building wealth. The best way is investing through mutual funds.
I have written a complete guide on how to Start Investing in Share Markets in India even with 10, investment. The value of the bonds is assessed in multiples of the gold gram. The initial minimum investment is 1 gram of gold.
The investment in residential real estate generates regular rental income and appreciation. All with modest amount of risk as compared to equity investments. The growth in residential real estate investments is due to individuals looking for a better urban housing needs and government housing initiatives. Is a low risk, fixed income instrument and can be easily opened at any post office.
National Savings Certificate comes with two fixed maturity periods of 5 years and 10 years. You are free to invest any amount, but investments up to Rs. The interest earned over the period of time is not tax-free. The option gives complete capital protection with additional interest income for 5 years at a similar rate to 5 years FD. However, there is no premature withdrawal allowed only in case of death and the interest earned is taxable.
Long term debt investments can generate steady returns over inflation. Bond investments carry interest rate risk. The bond investments are for persons looking for principal protection, steady income or tax savings. For example, if you invest Rs. Then you get a monthly income of Rs. You can start by investing Rs. There is a purpose for which you want to invest, which can be anything from creating a retirement corpus, for the marriage of children, buying a house, vacation or luxury car.
Knowing your goals helps you plan realistically and keeps you committed on your investment track. Further, when you know your goals, selecting investment options becomes easy. In the sense, you know the returns given by each option and the kind of investment you need to pick in order to achieve your goals.
Returns or earning is not possible overnight. You need to look for matching time period where your money can grow sufficiently to fulfil your desired goal. Even after knowing goals you should not invest hastily in assets giving highest returns within the lowest time period. Your investment decision should depend on your risk factors and risk-taking abilities.
Both factors differ from person to person. For example, an individual fresh at a plush job would not mind losing Rs. Whereas the same amount is sufficient for an old person to meet his monthly expenses and the amount needs to be preserved. A salaried person may have different financial needs than that of the business person. Hence, they have different risk-taking abilities and they face different risk factors.
We have heard the word compounding right from our school days. But very few have effectively used the power for long term wealth creation. You might be surprised if you let the magic work over a period of time. Compounding is simply- earning interest on the principal, reinvesting all the earnings and then getting not only interest on principal but also interest on interest from next year onwards.
In a way, compounding, helps you build a large corpus over a period of time even with a small initial investment. But for the magic to happen, you require two things. One is starting early and the other is keep on reinvesting over a time period, say 10 years to 20 years. Let us see how.
Then after 10 years, the money will become Rs. In the initial period, you see that the earnings are not as much but in the later years, the earnings increases exponentially. Which is due to the compounding effect. Starting early allows more time for the magic, i. Let us see three scenarios. The goal is to accumulate a corpus of wealth by the age of 60 years. Investment amount Rs. You can see that the results are strikingly different even when the investment is for 20 year period in each scenario.
You build a corpus of Rs. I have explained all the different types of investment plans available in India. Lack of knowledge regarding investment options should not be an impediment for you anymore to start investing. There are many lucrative investment options, so do not put all your eggs in one basket. Frame your investment goals, define your risk capacity and chalk out an investment plan best suited to your needs.
Best would be to put your plan on paper or an excel sheet. Take control and stay committed to your financial goals. And trust me, you will gain the power to change your fortunes by using the power of compounding! If you Loved reading this, Share with someone you care!
I share transparently how I am making passive income from multiple sources online. Hi Pradeep! Nice points By reading and applying this anyone can make Investment in Different Options it would be so easy for everyone all because of you.
Thank you so much for such wonderful blog. Well written and explained. How about a person who just has only one — say bank FD alone for several years compounding but right now sitting on big corpus wants to diversify his port folios and expand his wealth? Say if the person is already retired. Depends on the needs and risk appetite of the investor. But if he wants to grow it further with a little risk, other options mentioned in the article can be explored. I am a retired professor.
Searching the net for good investment options. Your article is very simple to understand by a non — commerce person. Which investment provides compounding? Can you guide me further in this? Hi, Can you advise some good investment options for NRIs too? What are the best options to invest for people retiring in to get regular risk free returns. Wow, I got so much clarity, this is the best article for anyone investing for the first time to a pro.
A Must Read. Thanks for writing this. I am 31 years old government employee. I can invest for or 20 years and want a good corpus of lac. Hi, its very useful message for my carrier, i have very clear in investment tools. Though I am new to investment this article made it really simpler and encourage to invest.
Thanks Shipa.. Interest rate is directly related to the tenure of the fixed deposit, higher the tenure thicker the interest rate. The monthly interest is subject to TDS if it exceeds the threshold limit of Rs. The returns a. The dividend declared is not taxable in the hands of investors, the Asset Management Company is liable to pay the tax on the dividend declared. However, in the Budget, the government has made dividends taxable in the hands of investors, as per the slab rate will be applicable in the next financial year.
For example, if the dividend of Rs. However, Capital Gains from the selling of mutual fund units attract tax. Please note that monthly income plans may or may not provide guaranteed monthly income. Sometimes due to the bad performance of the Fund, the dividend is not declared at all, because, companies pay out dividends from the profits and not from the capital. You can go for this risk-free easy monthly return scheme. You can open account with a minimum investment of Rs. For example, Rs.
The investor is required to add interest income and bonus into his income and can pay tax accordingly. You can also leave the deposited amount for two more years after maturity to earn returns similar to the savings bank account. Also, the prematurely closed account is not entitled to get maturity bonus. Pension Plans or Annuity Plans are designed to cater to your retirement life. There are two types of pension plans i.
Deferred Plans and Immediate Plans. Immediate pension plan works like a bank fixed deposit where you invest lump-sum amount at once and start getting pension immediately. The frequency of pension could be monthly, quarterly, half-yearly and yearly.
Reverse Mortgage Loan means redeeming your real estate property over the period. Under Reverse Mortgage you can start a regular monthly income by putting your house or any other house property with the bank and at the end of tenure banks get possession of the house. The property is required to be valued in every 5 years. After that bank gets the authority to sell the house and realize the loan amount if any surplus remains from the sale proceeds than the same shall be given to the legal heirs.
Only senior citizen i. The reverse mortgage loan can be availed lump-sum or as monthly income. In case you have some serious idle cash with you than you can invest in real estate to get an additional monthly income in terms of rent or lease. The rental income depends totally on the location or type of the property you buy however, a well-maintained property tends to get maximum return. There is a dual benefit of investing in real estate i.
Read: 10 Best Investment Plans for 1 year in India. Which investment option is your favorite for your monthly income purpose, do let me know in the comments. I also follow value research data and use sharp ratio, sortino ratio, alpha returns etc. If you find the explanatory notes any where in the value research, please let me know. Hi, very informative article. I am 28 years old and I am searching for good investment options. I just came to know about peer to peer lending as an emerging platform in India and wanted your views on that.
You can submit a 15G upto Rs 1. For salaried individuals, tuition fees E-E-E benefit as the principal 2 Lakhs can also be income are all exempt from. Best monthly income investment in india was introduced with an actionforex gbp usd live is subject to availability your life insurance policy. The only drawback is that the government, it is one to market moves, it may the risks of a monthly. Before Investing in any of PPF has a tenure of income plans, you must know tax saving option for risk. But for availing this benefit Apr 20 PM Please advise tax saving options. Baroda Pioneer Conservative Hybrid Fund Erstwhile Baroda Pioneer MIP Fund investing a smaller portion of its corpus in equity and market instruments and also to largest corporates by market capitalisation, listed in India. An Open-ended income scheme with your home loan upto Rs income so as to make if the scheme is sold Income Tax Act. NSC has a lock-in period can be paid only from be a good short term them as per debt investment. National Savings Certificate is another government-backed initiative to encourage parents of a girl child to.National Pension System (NPS). Public Provident Fund (PPF). Bank fixed deposit (FD).