7 Investment Schemes for Regular Income: FD, MIS, NPS, SWP & more schemes to generate steady income
7 schemes that provide regular income: Fixed deposit (FD), Post office Monthly Income Scheme (MIS), Senior Citizen Savings Scheme (SCSS), and mutual fund systematic withdrawal plan (SWP) are some of the investments that can provide regular income to their investors. A lot of investors invest in them to get a regular income pre or post retirement.
7 schemes that provide regular income: A lot of investors make investments with a view to get a regular income. Some of them while they are investing, and some on schemes' maturity. Many such schemes provide compound interest or growth, where investments grow faster with time. Such growth may also provide them higher payouts for regular income. Post Office Monthly Income Scheme (MIS), Senior Citizen Savings Scheme (SCSS), mutual fund systematic withdrawal plan (SWP), and National Pension Scheme (NPS) are some such options. Here, we take you through the 7 schemes that provide regular income.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
Monthly Income Scheme (MIS)
Post office runs this scheme where an individual or a joint account can be opened with a minimum of Rs 1,000 investment. The scheme provides a 7.4 per cent annual interest payable monthly. The maximum investment for an individual account is Rs 9 lakh, while for a joint account, it is Rs 15 lakh.
Monthly Income Scheme (MIS)
The maximum monthly income from the scheme is Rs 9,250. The account matures in 5 years, when the depositor gets their principal amount back. The account can also be closed prematurely after a minimum duration of 1 year from the date of deposit.
Fixed Deposit (FD)
FDs are guaranteed return schemes, where an investor invests one time and gets interest along with principal back on maturity. The FD tenure can be from a few days to 10 years. If investors want, they can also invest in FDs that provide regular periodic payouts such as monthly.
Fixed Deposit (FD)
Such FD plans provide them regular monthly income till the scheme's maturity. For senior citizens, it may be more beneficial as banks and small banks offer them higher interest rates compared to what they offer to general citizens.
Senior Citizens Savings Scheme Account (SCSS)
The post office scheme focuses on senior citizens and provides a quarterly income after a one-time investment, which can be a minimum of Rs 1,000 and a maximum of Rs 30 lakh. The maximum quarterly income possible from the small savings scheme is Rs 61,500. Among all post office schemes, it offers the joint-best interest rate alongside Sukanya Samriddhi Account (SSA) scheme at 8.2 per cent.
Senior Citizens Savings Scheme Account (SCSS)
Under Section 80C of the Income Tax Act, investments in the scheme also provide income tax benefits to old regime taxpayers. The maturity period for the scheme is 5 years, but accountholders can take one extension of 3 years. On maturity, the account holder gets their principal amount back.
Mutual Fund Systematic Withdrawal Plan (SWP)
A popular mutual fund withdrawal method among senior citizens, SWP provides monthly withdrawals after a one-time investment. Investors can make a large lump sum investment in a mutual fund scheme and ask the fund house to provide a fixed monthly income.
Mutual Fund Systematic Withdrawal Plan (SWP)
The fund house sells net asset value (NAV) units of the same amount and deposits it to the investor's account. While investors get a fixed income, their investments also grow. For such investments, hybrid and debt mutual funds can be an ideal choice given their less volatility compared to equity funds.
Income Distribution cum Capital Withdrawal (IDCW)
It's another form of mutual fund withdrawal to get a monthly income. Here also, an investor invests a large sum in a mutual fund scheme.
Income Distribution cum Capital Withdrawal (IDCW)
The fund house provides them a regular income in the form of dividends from stocks it has invested in plus the invested capital. After the withdrawal, the net asset value (NAV) price decreases.
Annuity plans
These are plans where an investor makes either a one-time investment or makes annuity payments for some years to get a regular income.
Annuity plans
The annuity firm provides them a fixed interest rate or market-linked returns along with the principal in the form of periodic withdrawals. Depending on the investment amount, the investor can get lifelong income from an annuity plan.
National Pension Scheme (NPS)
NPS provides a lump sum amount on maturity and a monthly income in the form of an annuity. Investments in an NPS I account also provide tax benefits to new and old regime taxpayers. An NPS account holder can make a monthly contribution to the retirement scheme and withdraw a lump sum amount at 60 years of age.
National Pension Scheme (NPS)
The maximum withdrawal allowed is 60 per cent of the total corpus. From the remaining amount, they purchase an annuity plan which provides them a monthly income. While there is no tax on lump sum and annuity amount withdrawals, income from annuity is taxed at slab rates.