Regular Income Archives -

5 Investment That Can Give You Regular Income

Sat, 13 May 2023 15:17:49 +0000

The Buyt Desk

We invest to make return. This is a way in which we grow our money for us. Here are 5 ways to invest your money that will give you assured monthly return.

Bank Fixed Deposit

Fixed deposits (FDs) with monthly payout are the most popular investment option to get regular income. By investing in this scheme, your investment amount gets locked for a fixed tenure and you’ll earn interest on your investment. You can consider a regular payout on a monthly, yearly, quarterly, or half-yearly basis. Fixed deposit with monthly payout is also called non-cumulative fixed deposits.

Bank FDs have a insurance protection for the deposit up to Rs 5 lakh. This investment option provides mid-high single digital interest rates, allowing investors to invest their money into an extremely secure scheme and get a guaranteed payout each month. You can earn money without the risk of losing your valuable amount due to market fluctuations.

Post Office Monthly Income Scheme or POMIS

This is a low-risk investment option offered by the Department of Post (DoP), Indian Post. The DOP reviews the interest rate quarterly. The POMIS is perfect for risk-averse investors who need regular income. The interest rates for this scheme are based on the returns provided by the Government Bonds of the same tenure. The Post Office Monthly Income Scheme presently offers a 7.40% interest rate per annum, payable monthly.

Since this scheme is regulated by the Government of India, you’ll receive an interest rate with a negligible scope of credit risk. An individual will get a deposit tenure of 5 years and can start investing with a minimum investment amount of INR 1500. The maximum investment amount is INR 4,50,000 which gets doubled i.e. INR 9,00,000 for joint accounts. You can reinvest the same POMIS investment for another five years once it matures.

Senior Citizen Saving Scheme or SCSS

This investment option is best for senior citizens. This scheme enjoys sovereign backing thus loaded with complete security assurance. It provides an interest rate of 8.2% per annum from 1st April 2023. You can open an account for this scheme as an individual or as a joint account with your spouse. It comes with five years of tenure and can be obtained at notified post offices and bank branches. If you want, you can extend the period for up to 3 more years.

You can invest INR 15 lakh and enjoy good returns. However, make sure that you subscribe to this scheme within one month after retirement. The interest you will receive from this investment is added to the taxable income and taxed according to your income tax bracket. You can save tax on this scheme as per Section 80C of the Income Tax Act, 1961.

This scheme is available easily. All you need is just fill out an application form at the nearest post office or bank. The application process needs minimum paperwork. KYC generally includes a DOB certificate, PAN card, passport, senior citizen card, etc.

Annuity Plan

This is another fund investment option for a regular income at a lower risk. Annuity plans are provided by Indian insurance companies for people who need a steady income to enjoy their life without any financial burden. You can use this investment option as a retirement plan by investing in a lump sum to get payments at regular intervals.

The investment made is further invested by the Indian insurance companies and the investor is paid with the produced returns. Investing in annuity plans requires several fees like surrender charges and commissions. Also, it doesn’t offer any tax benefits and is taxable.

Government Long-Term Bonds or Govt Securities

Government bonds or securities also called G-Secs are great low-risk investment plans for risk-averse investors. The main purpose of the government behind this bond is to increase the capital for government expenditure and the country’s economic needs. Long-term government bonds are basically the debt instrument issued by the State or Central Government. These are issued under the RBI (Reserve Bank of India) supervision.

These types of bonds generally range from 5-40 years and come with a predefined maturity date. By investing in these bonds, you will get regular interest rates or coupon payments as agreed by the Indian government. The interest rate on G-Secs bonds is known as the coupon rate or yield. According to RBI, the interest added must be paid to the investors every six months.

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How Annuity Plans Ensure that You Have A Regular Income Flow Even After Your Retirement?

Mon, 07 Nov 2022 04:00:13 +0000

The Buyt Desk

One should plan finances for retirement so that one can lead a quality life even when not earning. An annuity plan is one such arrangement made for retirement.

Retirement plans are financial policies to be bought when an investor is young and earning. These policies make it possible for you to plan for the future, post-retirement when you no longer have a steady income. There are two types of plans –

Pension Plan – The investment plan which allows you to methodically save money over the years and once you retire it will give you a steady income. A pension plan allows you to maintain your financial independence even after your income stops. Also, it helps you to deal with inflation while not compromising on your standard of living.

Annuity Plans – The investment plan which allows you to secure your financial future for the rest of your life with regular income payments. The annuity plans have terms and conditions based on the plan you choose. During an accumulation phase, you put money into the policy periodically. On retirement, with these accumulated funds you can purchase an annuity that will provide you with regular payments as per the plan.

What is an Annuity plan?

An annuity plan is a financial product that provides you with guaranteed regular payments after making a lump sum investment. Your investment is reinvested by the life insurance company and the returns generated from it are paid back to you in form of payments. You can consider this as a pension payment that you make to yourself. You have the flexibility to choose the frequency of payment based on your needs – monthly, quarterly, half-yearly, or yearly.

Retirement is stable and happy only when you have made different investments and have generated various income-generating options. An annuity is one such option and the final stage of a retirement plan. This allows you to draw a regular income even after your retirement. You can mretireitigate the risk of outliving your savings with help of the annuity plans. The annuity plan aims to convert your retirement corpus into a secure and long-term income.

How buying an Annuity Plan will help save for retirement?

As already discussed, annuities create a guaranteed income stream for the holder and his/her spouse. No other financial product can give guaranteed income over a lifetime. Annuities offer the following key benefits –

Safe and Reliable Income – Just saving will not help sustain your standard of living after retirement. The savings should also grow multiple folds by your retirement time. An annuity is a financial instrument to create wealth in the long term. It is less volatile and less risky when compared to other wealth-creating instruments. You can decide the frequency of payouts based on your needs – monthly, quarterly, half-yearly, or yearly streams. It offers assured income streams for you and your spouse’s lifetime. Annuity plans can be used to return the purchased corpus to your nominee after your and your spouse’s demise.
Wealth Boosters – Insurance investments gain from the movement dynamics in the financial markets. It is designed to give superior returns in the targeted period. Higher annuity installments can be availed for the increased purchase value. Online purchases of an annuity will increase the annuity rate by 2%. For NPS subscribers purchasing through the sales team or online channel will increase the annuity rate by 1%.
Loyalty Additions – Life Insurance offers an increase of annuity rate by 1% when purchased by existing policyholders of the company.
Automated Portfolio Strategies – Few plans allow you to build your retirement corpus and receive pension income from it. This way you can benefit from multiple investment options like debt and equity instruments. This is based on automated or predetermined allocation strategies. When young you can go for aggressive investment in equity-oriented funds and move to safe debt and liquid funds from equity as you grow old.
Tax-Savings under Section 80C & 10(10D) – Under Section 80C, the amount paid towards the premium up to Rs. 1.5 lakhs is deductible. Few plans also allow tax exemption on the amount withdrawn under Section 10(10D). The partial withdrawals made after retirement will be tax-free. The tax saving works when the annual investment in the plan is less than 10% of the life cover and the maximum annual investment in ULIP plans does not exceed Rs 2.5 lakhs (bought after 1st Feb 2021).
High Liquidity – Withdrawal is allowed under the “Special Surrender Value” status. When the specified conditions are met, you are allowed to withdraw your money.

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