Ways to Earn Monthly Income Through Investing in India

For many, the concept of earning a steady income without the typical 9-to-5 job is a dream come true. The good news is that it's more than just a dream. By finding the best investment plan for monthly income, this dream can become your reality.

Today, we're taking an in-depth look at various ways to invest your money in India, offering you options for investments with monthly returns. Let's delve into the world of investing and discuss how you can earn monthly income by investing smartly.

1. Monthly Income Scheme from Post Office

The Post Office Monthly Income Scheme (POMIS) is one of the best investment plans for monthly income. POMIS is a government-backed scheme. This reduces the risk quotient drastically. And let's not forget its competitive interest rates, rivalling many other fixed-income instruments.

The POMIS investment lifecycle begins with placing an investment under the scheme and securing it for five years. During this term, investors receive a portion of the interest every month. Think of it as a recurring income, every month. Once the tenure concludes, the initial amount is returned.

This makes POMIS an ideal investment with monthly returns for those seeking a reliable monthly income. 

Advantages:

• It offers guaranteed returns and is considered very safe as it's backed by the government.
• It is easily opened at any post office, providing accessibility for all.
• It's a great option for conservative investors due to the lack of market risks.

Disadvantages:

• The returns are not adjusted for inflation, which may lead to lower real returns.
• There's a maximum limit to the principal amount.
• Early withdrawal of the deposit, before the end of the tenure, can lead to penalties.

2. Fixed Deposits

Fixed deposits are one of the ways to invest that have been a go-to investment for generations. And for a good reason. They are safe and give regular returns.

Here's how it unfolds- When a person invests money in a fixed deposit scheme, the institution pays them interest either monthly, quarterly or annually. The rate of this interest is influenced by the tenure of the deposit and varies among different institutions.

Simple to understand and easy to implement, fixed deposits continue to be a popular choice for regular income generation.

Advantages:

• It's considered one of the safest investment options.
• It offers guaranteed returns unaffected by market fluctuations.
• Flexibility in choosing the tenure of the deposit.

Disadvantages:

• FD returns are subject to tax, which may lower the overall return.
• It often doesn't provide inflation-beating returns.
• There are penalties for early withdrawal.

3. Rental Income from Real Estate

Real estate, when leveraged correctly, can turn into one of the ways to invest for a consistent source of income. The process is straightforward. Invest in property and lease it out, ensuring a steady flow of rental income.

However, the income generated can be influenced by several factors. These include the location, type of property, and the current state of the real estate market.

Although the dynamics of property investment might require more involvement compared to other investment methods, the potential for generating regular earnings makes it worth considering.

Advantages:

• It provides a consistent source of passive income.
• Potential for property appreciation over time.
• Certain tax deductions are available for property owners.

Disadvantages:

• Requires a significant initial capital investment.
• Property management can be time-consuming and expensive.
• Risk of vacant periods without rental income.

4. Mutual Funds with a Systematic Withdrawal Plan

Mutual funds have emerged as the best investment plan for monthly income. They can be programmed to provide a steady inflow of funds using a Systematic Withdrawal Plan (SWP).

First, a person begins by investing money in a mutual fund with an SWP of their choice. This plan allows them to withdraw a fixed amount at regular intervals, such as monthly or quarterly. It ensures that they receive a steady stream of income, even as the rest of the investment continues to grow within the mutual fund.

Advantages:

• Provides a regular income stream.
• Offers potential for higher returns based on market performance.
• Customized withdrawal amount and interval.

Disadvantages:

• Market-linked product, so returns are not guaranteed.
• Possibility of capital erosion during market downturns.
• Requires active monitoring and management.

5. Monthly Income Plans from Mutual Funds

Known as Monthly Income Plans (MIPs), these mutual funds mainly invest in debt instruments, allocating a smaller portion to equities. This blend of safety and growth provides a balanced approach to income generation making it the best investment plan for monthly income.

The frequency of payouts can be tailored to pay out monthly, quarterly, or even annually. The versatility of MIPs makes them a viable option for those seeking consistent returns.

Advantages:

• Regular income through dividends.
• Balanced exposure to equities and debt, makes it a relatively safer bet than pure equity funds.
• Potential for better returns than traditional saving schemes.

Disadvantages:

• Dividend distribution is subject to fund performance and is not guaranteed.
• Market-linked product, so it carries some level of risk.
• Returns are taxable.

6. Senior Citizens' Saving Scheme

For those aged 60 or above, the government has a special scheme — the Senior Citizens' Saving Scheme (SCSS). Known for its attractive interest rates, SCSS goes a step further by offering tax benefits under Section 80C of the Income Tax Act.

Its most significant advantage lies in providing regular payouts, making it an excellent choice to earn monthly income by investing in a steady income during retirement.

Advantages:

• It offers a relatively high fixed rate of interest.
• Investments in SCSS qualify for tax deductions under Section 80C.
• Backed by the government, it's considered a safe investment.

Disadvantages:

• It's only available to senior citizens (60 years and above, or 55 years for those who have taken VRS or retired).
• There's a maximum limit on the investment amount.
• Premature closure of the account is subject to penalties.

7. Debt Funds

Debt funds primarily invest in fixed-interest securities like corporate bonds, government securities, and treasury bills. In comparison to equity funds, debt funds carry lesser risk, aiming to provide stable returns.

Some debt funds offer the option of a monthly dividend payout. This feature makes them a preferred choice for investors seeking consistent income. Debt funds can be an integral part of a diversified income-generating investment portfolio because of their reduced risk and steady returns.

Advantages:

• Generally less risky than equity funds.
• Offers the potential for regular income.
• Diversified investment portfolio reduces the risk of default.

Disadvantages:

• Returns are influenced by interest rate movements.
• Lower return potential compared to equity funds.
• Credit risk associated with bond issuers defaulting on their payments.

Conclusion

Each investment requires careful consideration and understanding. While this guide offers a good starting point, consulting with a financial advisor can provide personalized advice that aligns with one's financial objectives.

With a sea of options available, managing and calculating income from various investment instruments might seem daunting. This is where Tata Capital's Moneyfy Mutual fund app can be a game-changer. It is a user-friendly digital platform designed to simplify one's investment journey. It not only helps people manage their investments but also assists them in making informed decisions about their financial future.

Here's to financial success!