How You Can Generate Sustainable Monthly Income From Your Investment?
Hi folks,
I welcome you all to my other post where you will get to know how you can generate sustainable monthly income from your Investments.
In my previous post, I explained how a monthly SIP of Rs 6,000 will give you Rs 17 crores. If you haven't checked it yet I have provided the link below
Now coming back to the topic, how you can generate sustainable monthly income from your investment. Some of the investments are low risk, some are medium risk and some are high risk. In this article, I will also tell you how much you should invest in multiple options.
1. Post Office Monthly Income Scheme (POMIS)
POMIS is an investment option offered by the post offices at an interest rate of 7.4% per annum. The interest is paid monthly. The minimum amount of investment is Rs 1,000 and the maximum amount is Rs 9 lakhs for individual holders. The maximum limit of joint holders is Rs 15 lakhs.
If you invest Rs 1 lakh, then you will get an interest of Rs 7,400 annually. The monthly interest will be Rs 616.67.
This is a low-risk investment because it is backed by the government of India. This is a perfect investment option for people who prefer low-risk investment schemes.
2. Corporate Deposits
Corporate deposits are generally done in NBFCs (Non Banking Financial Corporations). The investment is done in the form of FDs and they provide a fixed rate of return.
They generally have higher interest rates compared to the Nationalised and private banks. This is the reason this investment option is medium risk.
Unlike nationalized and private banks, NBFCs have no insurance on investments made.
3. Annuity plans
These plans are provided by the life insurance companies. They are in the form of insurance, and once the term ends, you will start getting an annual income or pension.
This investment option is low risk because these are long-term investments. For example, if a plan is taken for 25 years at the age of 35, then you will start getting the annual amount at the age of 60.
This option is suitable for those who prefer to have a decent income with their insurance plans.
4. Debt Mutual Fund
These are the mutual funds that invest money in debt instruments instead of equity. Some examples of debt Mutual Funds are fixed deposits, Government Bonds, Government treasury bills, corporate bonds, and many more.
The fund manager keeps on juggling between various debt instruments. Although, it does not provide a fixed rate of return but the return amount varies very little.
On average, you will get around a 7 to 8% rate of return but there is no limit on the investment. For example, if you invest Rs 50 lakhs then you will get Rs 3.5 lakhs annually as a guaranteed income.
5. Equity share dividends
When you invest in the equity market, there are two ways to earn money. First is by stock appreciation and second is the dividend given by the company out of the profits to the equity shareholders.
One of the benefits of dividend income stocks is that you need not to sell the stock to earn money. However, the size of the dividend is very small which means if you are investing around Rs 1 lakhs, then you might get around Rs 4,000 to 5,000 annually.
6. Long Term Government Bonds
It is a type of fixed deposit by the government which is generally for a tenure of more than 5 years. Since the time period is long, the rate of return is not very attractive.
This type of investment is suitable for people who prefer stability over risk.
7. Real Estate
Just like stocks, real estate also has two ways of income streams. First is the rise in the value of property, and second is the rental income. Rental income is the most famous reason people invest in real estate.
The return on real estate is calculated in the form of rental yield, which is around 1.5 to 3% for residential property and around 6 to 10% for commercial property.
8. Systematic Withdrawal Plan (SWP)
SWP is the riskiest of all investment plans. To understand this, let us frame an example.
Assume your age is 25 years and you want to start a regular income at the age of 45 years.
You are investing in a monthly SIP of Rs 5,000 with an increase of 5% annually.
Assume that you invest in index mutual funds and the average return is 13%.
The time period of investment is 20 years.
At the age of 45, you will have a corpus of around Rs 77,77,000, whereas the invested amount is just Rs 19,83,957.
Now assume you want to have a monthly income of Rs 50,000. This income also increases by 5% annually. This means you would have to sell a few units each month to fulfill your monthly expenses.
Believe me folks, you will never get out of money even if you live for 100 years.
This is the power of compounding.
For detailed calculations and analysis, you can message me…….
Disclaimer: You must invest after considering your risk-taking capacity. The above information is not any recommendation or suggestion. It is only for an educational purpose. You must seek the advice of a professional financial advisor before making any investment.
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