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How to Earn Monthly Income by Simple Investment?

30/09/2022 |

Different people opt for various investment options for different reasons. Some may want to accumulate enough financial resources 10 years down the line to be able to start a business, while someone else may want to support their child’s further education. Even people close their retirement need to ensure that they have enough money on a monthly basis to be able to sustain themselves and their families. A ULIP investment can be one such investment option that many people seek out for creating and generating wealth over the long term.
 

The reason a Unit Linked Insurance Plan or a ULIP plan is favoured by many investors is that it provides the dual benefits of life insurance and an investment plan under the same policy. The aim is to have a monthly fixed income in the future.
 

Simple Investments to Earn Monthly Income
 
  • Post Office Monthly Income Scheme (POMIS)

    In India, post offices also offer some saving schemes such as the Post Office Monthly Income Scheme, where any investor, irrespective of their risk profile, who is an Indian citizen, can open a POMIS account at their nearest post office. When opening this account, either on an individual or joint basis, you can invest a minimum of ₹1,500 or in multiples of ₹100.

    But if you want to earn a monthly income from this investment after the lock-in period of 5 years, then you can invest up to a maximum of ₹4.5 Lakh for a single account or ₹9 Lakh for a joint account. However, if the account is for a minor individual, the maximum investment is ₹3 Lakh. By investing in this scheme, not only can you earn regular income but also an interest rate of 6.6% per month (current rate).

  • Bank Deposits

    Bank deposits as a Fixed Deposit can enable investors to earn a desired monthly income as per their choice. Since most banks across India offer monthly income fixed deposit schemes, you can start investing in Fixed Deposits for a minimum tenure of 12 months (for monthly income, otherwise 7 days) or a maximum of 10 years. Public sector banks offer interest rates of 2.85% to 2.05%, which are applied on a compounding basis. In the case of senior citizens, an interest rate of 0.50% will be applicable.

    Once the FD matures, the invested amount can be withdrawn, and the account can be closed. However, if you opt for a monthly income FD scheme, you need not close the account. To earn a fixed income per month, the investment amount over a span of 10 years should be anywhere between 11 Lakh to 13 Lakh.

  • Atal Pension Yojana (APY)

    The APY or Atal Pension Yojana is a government-sponsored scheme that was introduced in 2015 to help pensioners earn a fixed amount of money as a pension cover once the scheme matures. Therefore, you can start investing in this scheme as early as 18 years of age and continue the investment until your retirement to receive a monthly income. This amount of monthly fixed income will, however, depend on how much you invest during the investment tenure.

    The maximum age limit for starting an investment in this savings scheme is 40 years, and the government also makes contributions of 50% of the pensioner’s contribution or ₹1000, whichever is lesser, for up to 5 years of the tenure. It is necessary to complete all your bank KYC processes before you invest in the Atal Pension Yojana.

    Another requirement of the APY is that the subscriber cannot be investing in any other government-back social security savings scheme or not come under any of the tax* slabs that pay income tax* each year. Hence, low-income groups can avail of this scheme and make their contributions on a monthly, quarterly or half-yearly basis.

  • Unit-Linked Insurance Plan

    Most life insurance companies offer Unit-Linked Insurance Plans for policyholders who wish to combine investment and insurance under a single policy without having to pay separate premiums for both. Hence, with a single investment per month or a limited period, you can start a long-term investment in market-linked funds of your choice.

    ULIPs come with a lock-in period of 5 years, after which you can make partial withdrawals to avail of a regular monthly income. Alternatively, on the maturity of the ULIP, you can reinvest the lump sum returns in a monthly income scheme of your choice and receive a monthly income. Until maturity, you can continue investing in the ULIP without withdrawing the funds.

    It is always advisable to choose a ULIP policy that meets your risk profile requirements. Tata AIA Life Insurance offers a range of fund options for their different ULIP plans, where you can not only choose the funds but also opt to switch between different funds under the same policy to realign your investment goals.


  • Mutual Funds

    For investors wanting to earn better returns on their investment, mutual funds offer a diversified option for market-linked instruments. However, unlike the stock market, mutual funds are managed by fund managers, which can help you manage some of the portfolio risks.

    When investing in mutual funds, one can pick from various asset classes depending on the risk profile of the investor since market volatility is an important factor at play in the returns. One can choose from equity funds, debt funds and hybrid funds as per their risk profile. For instance, debt funds invest in assets that offer fixed income.

    If you are looking to earn a regular income from your mutual fund investment, you can opt for a Systematic Investment Plan and make a long-term investment. Over the tenure, the investment will benefit from compound interest, and you can also choose to have the dividends paid out or reinvested in your corpus. With a Systematic Withdrawal Plan (SWP) on a monthly basis, you can earn a regular income while the balance amount in the fund continues growing with compound interest.

Conclusion
 

Though there are also stock market investments that can enable you to make money, these investments are better suited for more seasoned investors. The options given above are some of the plans you can invest in for earning a regular income. However, in the case of ULIPs, though the returns may not be fixed, the life insurance coverage is assured and can protect your loved ones in your absence.


L&C/Advt/2022/Sep/2357

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

Is Tax* Deduction at Source (TDS) applicable on bank deposits?

The standard TDS rate applied to your interest-earning is 10% if your PAN card is registered with them. Otherwise, the applied rate is 20%.

Can I purchase a ULIP if I want regular income during retirement?

Yes, you can invest in a Unit-Linked Insurance Plan years before you retire. However, note that you will not be able to make any withdrawals during the 5-year lock-in period. With a ULIP, you will not only be able to get regular income by making partial withdrawals after the lock-in phase, but you can also protect your family with life insurance cover in case of your demise.

Disclaimers

  •  Insurance cover is available under the product.
  •  The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • N THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.