Savings can be optimized to ensure financial security and for generating monthly income as well. It requires to invest money in beneficial and risk-averse avenues. Fixed monthly income schemes are generally preferred by investors close to retirement in order to get a stable source of income. Here are the best monthly income schemes to provide stable income to investors.
1. Fixed Deposits (FDs)
Whenever an individual looks for low-risk and fixed income schemes, a fixed deposit is the first option that comes to mind. FD interest rates are pre-decided for the entire lock-in period and remain unchanged even if the market goes down during the lock-in period. Therefore, there will no disruption in your regular interest income. Investors need to choose non-cumulative fixed deposits to earn regular interest income. FD account can be opened with banks, non-banking financial companies (NBFCs) and post offices. For higher interest rates up to 7.25%, best to choose corporate FDs with NBFCs such as Bajaj Finance.
2. Post Office Monthly Income Scheme (POMIS)
Investors can make investments up to Rs 4.5 lakhs in the Post Office Monthly Income Scheme to earn monthly interest. It is considered safe because it is a government-backed scheme. The tenure of POMIS is 5 years and the current interest rate is 6.6%. POMIS account can be opened jointly to increase the investment limit up to Rs 9 lakhs.
3. Senior Citizen Saving Scheme (SCSS)
SCSS is especially for senior citizens of 60 years and above offering the security of funds and financial support for retired people through a regular stream of income. Retirees must open the SCSS account within the first month of securing their retirement benefits. There is an investment limit also. The deposit amount cannot be more than the retirement benefit received. The lock-in period of the scheme is 5 years that can be extended after maturity for another 3 years. The latest SCSS interest rate is 7.4% which changes quarterly. Depositors can open more than one account as well but the maximum limit to invest in SCSS is Rs.15 lakhs in total.
4. Debt Mutual Funds
Debt mutual funds take exposure in the high-quality debt instruments and fixed income securities like bonds, treasury bills, debentures etc. It is a moderately low to moderate risk investment that helps to generate stable income. Gilt funds, Corporate Bond funds, liquid funds etc are some of the investment options in debt funds. There are no guaranteed returns.
5. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Under PMVVY plan, the government of India provides guaranteed rates of pension to senior citizens of 60 years or more. This rate will be decided at the starting of every financial year. At present, it is 7.40% p.a. and payable monthly. The scheme is solely operated by the LIC of India. The sale of this plan is available till 31st March 2023.
Investors should look at their taxable income and calculate interest income from various sources and try to keep it less than the exemption limit.
What is the interest rate for fixed deposit?
- Bank Fixed Deposit Rates is between 4-6%.
- Corporate Fixed Deposits are at a higher position with higher interest rates. With Bajaj Finance, FD interest rates are up to 7.25%.
- Post Office Term Deposits are available at 5.5-6.7%.
This is the range of FD interest rates with different financial institutions. The FD rate applicable on your FD account will depend on the tenor you choose, investment amount and investor’s category as well. For example, Bajaj Finance offers an additional interest rate of 0.25% to senior citizens and they can open FD account online without paperwork formalities.