7 schemes that can provide you regular income in young and old age
7 regular income investment plans: Regular income is very important for everyone to run daily expenses. Many schemes, such as mutual fund Fixed Deposit (FD), Systematic Withdrawal Plan (SWP), Monthly Income Scheme (MIS), Senior Citizen Savings Scheme (SCSS), and Atal Pension Yojana (APY), can provide you regular income-
7 regular income investment plans: If you are young or old, you need regular income to run your daily expenses. For officegoers or self-employed, it is easy to generate income through their salary or business. People in old age depend on their pension or returns from investments to get regular income. There are many investment schemes where one can invest in their young or old age and can get regular income from them. Some of such schemes are fixed deposit (FD), annuity plans, mutual fund systematic withdrawal plans (SWP), Senior Citizen Savings Scheme (SCSS), Post Office Monthly Income Scheme (MIS), Atal Pension Yojana (APY), and mutual fund's Income Distribution cum Capital Withdrawal (IDCW) plans. Get more details about these monthly income schemes in this write-up.
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Fixed Deposit (FD)
Banks and small banks offer FD schemes of different durations and amounts. Investors make a one-time investment and get returns in the form of interest on maturity.
Fixed Deposit (FD)
However, if investors want, they can talk to the FD issuer to get interest yearly, half-yearly, quarterly, or monthly. Investment in the 5-year FD also provides tax benefits under Section 80C of the Income Tax Act, 1961.
Senior Citizens Savings Scheme Account (SCSS)
The post office scheme provides 8.2 per cent interest to its accountholders.
One can have a single or a joint account under the scheme.
One can invest up to Rs 30 lakh in the scheme and get quarterly income in the form of interest.
Senior Citizens Savings Scheme Account (SCSS)
The account has a lock-in period of 5 years, but it can be extended for 3 years.
Investments in SCSS qualify for tax benefits under Section 80C.
Post Office Monthly Income Scheme Account (MIS)
This is also a guaranteed return, fixed income scheme, where one gets annual interest of 7.4 per cent.
MIS also allows its accountholders to have a single or a joint account.
Post Office Monthly Income Scheme Account (MIS)
In an individual account, the maximum investment limit is Rs 9 lakh, while in a joint account, it is Rs 15 lakh.
In an individual account, one can get a maximum monthly pension of Rs 5,550 for 5 years, while in a joint pension, the maximum pension is Rs 9,250 for 5 years.
In an individual account, one can deposit a maximum of Rs 9 lakh, while in a joint account, the maximum limit is Rs 15 lakh.
Systematic Withdrawal Plan (SWP)
In a mutual fund SWP plan, you make a lump sum investment and get monthly income in the form of returns from investments.
When you set up a SWP plan, the mutual fund house sells your net asset value (NAV) units every month to provide you with a pre-decided monthly income.
Systematic Withdrawal Plan (SWP)
While you get monthly income, the value of your fund also increases simultaneously.
If your rate of withdrawal is lower than your rate of return, you can get monthly income for scores of years.
Atal Pension Yojana (APY)
Under Atal Pension Yojana (APY), the government provides a guaranteed minimum monthly pension of Rs 1,000, Rs 2,000, Rs 3000, Rs 4000, or Rs 5,000 per month to workers in the unorganised sector from the age of 60 years.
Atal Pension Yojana (APY)
The pension is based on the contributions made by the subscribers.
Even if returns on an individual's contributions are less than the money required to provide a minimum monthly pension, the government pools in to provide that.
To avail the benefit of APY, a subscriber should be between 18 and 40 years old and have a savings bank account in a post office/savings bank.
Annuity Plans
Annuity plans are also a popular tool to get monthly income.
In an annuity plan, a subscriber makes a one-time investment and gets a monthly pension.
They can get two options under annuity plans: immediate annuity and deferred annuity.
Annuity Plans
If the policyholder picks an immediate annuity plan, they get immediate monthly income, while in a deferred annuity plan, they start getting income after a fixed-tenor period specified by the policyholder.
Income Distribution cum Capital Withdrawal (IDCW)
In an IDCW plan also, an investor makes a one-time lump sum investment to receive regular monthly income.
IDCW benefits investors from income distribution and capital withdrawal.
The amount one receives in an IDCW plan depends on the NAV price and the subscriber's holding period in the scheme.
Income Distribution cum Capital Withdrawal (IDCW)
Investors can get IDCW payments even if the fund is not making profits.
This is because IDCW payments encompass income and capital withdrawals, allowing investors to receive a consistent return on their investments.