Many a times, we come across situation when we have surplus cash to park somewhere, with the expectation of generating regular return as well as it should be safe. An income portfolio is a collection of investments that yields regular income. This means that you receive cash on a regular basis, usually monthly, quarterly or annually, without needing to sell the investment.
In such situation, we may explore the following options:
- Post Office Monthly Scheme:
- Safe & sure way to get a regular monthly income.
- Specially suited for retired employees/ Senior Citizens
- Rate of interest 8.40%; Maturity Period – Five Years.
- Minimum investment Rs.1500;
- Maximum limit being Rs. 4.5 Lacs for individual account and Rs. 9 lacs for joint account.
- Penalty @ 2% if closed before 3 years; penalty @ 1% if closed between 3-5 years
- No TDS; however, interest income is taxable as per the tax slab of the investor
2.Monthly Income Plan (MIP) of Mutual Funds:
- These are debt instruments which generally has 75-80% of its money in debt categories and a little in equity as a “kicker”. in addition to generating a monthly income, this combination aims to protect your purchasing power in the long-term against inflation by allocating small amount in equities.
- It offers regular income in the form of periodic (monthly, quarterly, half-yearly – as per investor choice) dividend payouts.
- Such payouts are paid from the capital appreciation generated by the fund and are thus not assured.
- Dividends received from MIP’s is tax-free in hands of investors; however, they have already been subject to DDT payment
- Ideal product to invest if one anticipates reduction in interest rate over medium term and also a surge in equity markets during the period under consideration. The debt portion is influenced by interest rates. When interest rate falls, the NAV of scheme rises as price of bond increases and vice versa.
The post office is definitely safer bet. But, what you could do is invest part of your money there and part of it in fund MIPs.The average one year return of MIP is 10.41% which is higher than what you will get on a conventional fixed deposit or a post office deposit.