Are you looking for the best way to generate a monthly income? You may have heard of options like fixed deposits and monthly income schemes, but do you know which one is best for you? In this guide, we will compare the benefits, returns, and risks associated with these two investment options.
If you’re aiming to enhance the diversification of your investment portfolio, considering an investment in structured debt which is one of the most trending monthly income schemes could be beneficial for you.
This scheme offers the potential for attractive returns and consistent monthly income. With an affordable entry point of 10 lakhs, you can participate in this domain through the reputable alternative investment platform, Assetmonk.
What are Monthly Income Schemes?
A monthly income scheme or MIS is a financial deposit that requires the investor to first pool the money with the lender, and then earn returns, which are shared every month, thereby acting as a steady source of income.
What are Fixed Deposits?
A Fixed deposit (FD) is a financial instrument that allows you to lock in your savings for a period and offers a fixed return for the duration of the deposit.
While both aim to provide you with a regular income, they differ in terms of structure, returns, risks, and flexibility.
Importance of guaranteed returns for investors
The value of investments with guaranteed returns cannot be understated given the volatility of the financial markets.These types of investments effectively become safety nets, offering a degree of certainty in terms of returns, which helps plan other aspects of an individual’s financial life.
Best Monthly Income Schemes Available in India
India’s investment environment provides a wide range of choices for Monthly Income Schemes. Each scheme has its unique set of features and returns, and it is essential to comprehend these aspects before making an informed choice.
1. Real Estate Investment Trusts (REITs)
REITs are an attractive option for generating monthly income. These investment vehicles pool funds to invest in income-generating real estate properties and distribute a significant portion of rental income as dividends.
2. Monthly Income Plans (MIPs)
MIPs are known for providing stable fixed income investments. These hybrid mutual funds primarily focus on debt securities and offer regular monthly distributions to investors.
3. Real Estate Structured Debt
Real estate structured debt is one of the best monthly schemes. Real estate structured debt is an appealing option for those seeking a stable monthly income. It involves lending capital to real estate projects and receiving regular interest payments, offering attractive yields and lower volatility compared to equities.
4. Post Office Monthly Income Scheme (POMIS)
POMIS is a secure and low-risk investment avenue that ensures a consistent monthly income stream for investors. For someone who doesn’t like to take a lot of risks and look for steady returns over a period of 5 years, POMIS could be a part of your investment plan.
5. Equity Investments
Investing in equity investments can provide an opportunity to secure reliable monthly income. These companies distribute earnings to shareholders at regular intervals.
6. Unit Linked Insurance Plans (ULIPs)
ULIPs combine insurance and investment. Some ULIPs offer the flexibility of partial withdrawals after a lock-in period, potentially providing a monthly income stream.
Benefits of Monthly Income Schemes
For those looking for a reliable source of income, monthly income schemes are a desirable investment choice because they provide a number of advantages. Here are a few key advantages of monthly income schemes:
Regular Monthly Income:
As the name suggests, monthly income schemes provide a fixed amount as income on a monthly basis, ensuring a consistent cash flow to meet your financial obligations.
Flexibility in Investment Tenure:
Higher Returns Compared to Fixed Deposits:
In many cases, monthly income schemes offer higher returns compared to fixed deposits, making them an enticing option for investors.
Some monthly income schemes offer tax benefits, allowing you to save on your overall tax liability. Be sure to explore the tax implications of different schemes before making a decision.
Advantages and Disadvantages of Fixed Deposits
Fixed deposits have long been considered a safe and reliable investment option. However, they come with their own set of advantages and disadvantages. Let’s take a closer look:
Advantages of Fixed Deposits:
Unlike other investment options, fixed deposits provide stability and peace of mind by offering guaranteed returns at a fixed rate of interest.
Fixed deposits are considered relatively low-risk investments as the principal amount is not susceptible to market fluctuations.
Flexible Tenure Options:
Fixed deposits, like monthly income plans, provide flexible tenure options that let you align your investment to your financial objectives.
Disadvantages of Fixed Deposits:
Lower Returns Compared to Other Investment Options:
Fixed deposits offer steady returns, but they frequently yield less than other investment options like mutual funds or real estate structured debts.
Once you make a fixed deposit investment, your money is locked in for the specified amount of time, which restricts your ability to access money in an emergency.
Tax on Interest Income:
The interest earned from fixed deposits is taxed as per your income slab, which can reduce the overall returns. Consider this tax liability while evaluating the potential gains from fixed deposits.
|Investment Option||Yield||Returns||Tax Implications||Volatility||Security|
|REITs||5.5%-7.5%||8.11% (Mindpsace REIT)||Taxation on dividends||Moderate to High||No guarantee|
|Monthly Income Plans||Varies||11-14%||Taxation on gains||Low||Diversified Portfolio|
|FDs||Varies||4-8%||Interest income taxable||Low||Bank Guarantee|
|POMIS||Varies||7.1%||Interest income taxable||Low||Sovereign Guarantee|
|Real Estate Structured Debt||12-20%||12-20%||None||Low-None||Backed By Real Estate|
|ULIPs||Varies||12%||None post 5 years||Medium to High||Diversified Portfolio|
Comparing Monthly Income Schemes: Finding the Best Option
When it comes to choosing the best monthly income scheme, it’s essential to conduct a thorough comparison. Here are a few factors to consider:
Evaluate the returns provided by various monthly income plans. To maximise your earnings, look for schemes that offer competitive interest rates.
Evaluate the investment tenure options available with each scheme. Consider your financial goals and select a tenure that aligns with them.
Reputation and Credibility:
Research the reputation and credibility of the institutions offering monthly income schemes. Opt for schemes provided by well-established and trustworthy organizations like Assetmonk to minimize risks.
Explore the tax benefits associated with each scheme. Some schemes offer tax exemptions or deductions, which can enhance your overall returns.
Signature Series B is a Monthly income scheme Offered by Assetmonk in the form of structured debt which offers an assured 17% IRR. It has a Lock-in period of 36 months and Real estate structured debt investments can additionally avail tax benefits up to Rs. 50, 000.
Why should you opt for Monthly Income schemes Vs Banking?
The most popular options for investors have been fixed deposits and monthly income schemes. However, they serve a different group of investors with various expectations, which raises the crucial question, which is better? Both are heavyweights and we have tried to highlight points that tell them apart from one another.
- Short-term and Long-term Performance
There is no point in thinking about FDs as an investment if you’re looking for quick returns. FDs will bear fruit only when they are kept for a considerable period. Even if you are investing in FD with the motive of taking back your money after a few months and gaining some profit, let us inform you that there will hardly be any profit after the bank imposes the penalty. In the short term, strategic investment in monthly investment plans like structured debt real estate can give you a decent profit.
FDs improve things over the long term. When you choose to invest in FDs, you can earn about 7% a year. The interest rate rises as investment duration lengthens (though never surpassing 7!).
Looking at the way the population is rising and the scarcity of land, we can safely say that investment in real estate for the long term will bring you a hefty profit. Assetmonk offers a monthly income scheme called Signature Series B, With a minimum investment of 10 lakhs and an assured IRR of 17 percent.
- Risks involved
Monthly income schemes are considered to be less risky than market-based investments while providing a steady monthly income.
On the other hand, bank deposits are considered one of the safest mediums of investment. The only risk going forward is the bank going bankrupt which is highly unlikely. Being the one with a lower risk, the returns are limited in its case.
If you want to play safe and are content with limited return on your plate, bank deposits will serve you right.
- Liquidity and Ease of Exit
Bank Deposits are not highly liquid, but when you compare them with real estate investments, they are much easier to encash. Opting out of FDs is a simple affair. All you need is to go to your bank and fill up a form. The bank will process the form and give you your rightful money.
While monthly income schemes (MIPs) are more liquid when compared to Fixed deposits (FDs). As there is no lock-in period applicable on most of the schemes, investors can choose to withdraw their funds to meet any unforeseen emergency.
Through alternative investment platforms such as Assetmonk, investors can participate with a minimum investment horizon of 36 months.
Choosing the Right Investment Option: Monthly Income Scheme or Fixed Deposit?
Selecting the right investment option comes down to understanding your financial goals, risk appetite, and investment horizon. Here are a few points to consider:
Goals: Short-term vs. long-term:
A fixed deposit might be a good choice if you want to save money for a short-term purchase like a car or vacation. An income plan with higher returns on a monthly basis might be preferable for long-term objectives like retirement planning.
Carefully consider your level of risk tolerance. Fixed deposits are a safer option if you value stability over risk. However, if you can tolerate a moderate level of risk for potentially higher returns, monthly income schemes are worth exploring.
Consider diversifying your investment portfolio. You can allocate a portion of your funds to both monthly income schemes and fixed deposits to strike a balance between stability and potential returns.
The Best Monthly Income Scheme in India: Making the Right Choice
One of the safe monthly income schemes with high returns in India is real estate structured debt.
Investing in Commercial Real Estate Structured Debt offers several advantages. First of all, it offers investors a fixed income and consistent interest payments for the duration of the investment. Secondly, this investment avenue is secured by the underlying real estate assets, minimizing the risk of default.
Last but not least, because structured debt investments frequently have a short investment period, investors have the option to reinvest their money or diversify their portfolio more frequently.
In the quest for the best monthly income scheme, it’s crucial to evaluate both monthly income schemes and fixed deposits based on your financial goals and risk tolerance. While fixed deposits offer stability, guaranteed returns, and low risk, monthly income schemes offer regular income, higher returns, and flexibility. You can choose wisely if you carefully weigh the advantages, advantages, risks, risks, and tax implications of each option.
Assetmonk, a prominent alternative investment platform based in India, presents investors with a unique avenue to engage in monthly income schemes through real estate structured debts.
The Signature Series B stands out as a remarkable monthly income scheme with a primary focus on real estate structured debt among their notable investment offerings. With a guaranteed Internal Rate of Return (IRR) of 17.1 percent, this product currently offers investors an alluring chance to earn attractive returns.
The accessibility of this opportunity, which allows people to start investing in this product with just Rs. 10 lacs, makes it even more alluring. This low entry threshold ensures that a wide range of investors can participate and benefit from this exceptional investment opportunity.
- A Comprehensive Guide On Fixed Income Investments.
- How To Invest 10 Lakhs Rupees For Monthly Income
- Structured Debt Backed by Real Estate vs. Debt Mutual Funds
Q1. What is a fixed deposit (FD) monthly income scheme?
A. A fixed deposit monthly income scheme is a type of investment plan that offers a fixed interest rate and provides regular monthly income to investors.
Q2. How to encash the Fixed deposits?
A. Opting out of fixed deposits is a simple affair. You can ask your bank to break the FD and fill up the necessary form and surrender it to the bank. The bank will then process your request and give you your rightful money.
It is a simple, hassle-free process and will hardly involve any complex procedures or time.
Q3. Which investment will give me monthly income?
- Commercial real estate structured debts will give you monthly income. You only need to invest with just Rs. 10 lakhs and get an assured IRR of 17 percent via Assetmonk.
Q4. Can I invest money and get monthly income?
A. Yes, you can invest money and get monthly income. In fact, the best way to invest and get monthly income is via real estate. You can get real estate monthly income via rental income.