Monthly Income Plans
A Monthly Income Plan is an investment instrument primarily designed for risk-averse investors. Monthly Income Plans fall under the category of Hybrid Funds, where the majority of your investment goes into debts and money market instruments.
A Monthly income plan is preferred by conservative investors looking to create an alternate source of steady income. The investors have the luxury of liquidity aside from the regular dividends. However, the critical factor to note here is that the monthly income from MIPs is not fixed. Like all market-related investments, the dividends vary with profits.
Types of Monthly Income Scheme
1. Dividend-Oriented Monthly Income Plan
- Generates earnings in the form of dividends
- Dividends paid to investors are tax-free
- Suitable for those seeking regular income
2. Growth-Oriented Monthly Income Plan
- Earnings are reinvested into the plan instead of being paid out
- Helps the investment corpus grow over time
- Ideal for individuals focused on capital appreciation
Who should Invest in Monthly Income Plans?
1. Conservative Investors who are looking for better returns
Instead of parking your money in fixed deposits at an interest rate of 6-8%, you can easily switch to a MIP. The returns for MIP are usually in the range of 10-12%.
2. Safeguard your future
We never know what the future has in store for us. It is essential to cultivate investment as a habit to not suffer from any financial crisis in our later years. MIPs helps you create a better corpus for your future.
3. Investors who are looking for an alternative source of income
If you are a retired person looking for an additional income source aside from your pension, MIPs are your best bet as they provide periodic payouts.
Features and Benefits of Monthly Income Plans
Open-Ended Scheme: MIP is an open-ended scheme, which means investors can enter or exit the fund at any time without needing to pay any processing fee to join.
Good Returns: The returns offered by MIPs are generally higher compared to fixed deposits or post office Monthly Income Schemes (MIS), making them a more attractive option for moderate risk investors.
Liquidity: MIPs come with the advantage of liquidity. There is no lock-in period, and investors can withdraw their funds whenever needed.
Professional Management: MIPs are managed by experienced fund managers who have deep expertise in capital markets. This professional oversight ensures optimal allocation based on market conditions.
Low Risk: Investments in MIPs are typically placed in low-risk securities like fixed income instruments, making them ideal for conservative investors looking for steady income with minimal volatility.
Exit Load: MIPs have a minimal exit load, which cannot exceed 1%, making it relatively cost-effective for early withdrawals compared to other instruments.
No Investment Limit: There is no upper limit on the amount you can invest in an MIP, offering complete flexibility to invest as per your financial goals and risk appetite.
Advantage
- At Fincover, you can find a large selection of SIPs from multiple fund houses
- Fill in a few details and compare SIPs from various financial institutions
- Choose the one that fits your requirement and start investing
Things to Consider before choosing a Monthly Income Plan
- Your Financial goals
- The time horizon of the investment
- The risk appetite of the investor
- Potential wealth generation of the scheme
- Tax benefits offered by the scheme
