Monthly Income Plans (MIPs)
Monthly Income Plans (MIPs), also called Monthly Income Schemes (MIS), are investment options that pay you a steady income every month. They work like a safety net:
- Stable core: Most of your money goes into low-risk debt (like bonds).
- Growth potential: A small part is in equity to boost returns.
Types of Monthly Income Plans
- Post Office Monthly Income Scheme (POMIS)
- Govt-backed with ~7.4% annual return, paid monthly.
- 5-year lock-in, ₹1,500 minimum, up to ₹9 lakh (joint) or ₹4.5 lakh (single).
- Fixed Deposit Monthly Schemes
- Offered by banks and NBFCs; interest paid monthly.
- Yields vary 6–9%, flexible durations.
- Senior Citizen Savings Scheme (SCSS)
- For retirees (60+), ~8% annual rate, quarterly payouts.
- Monthly Income Mutual Funds (MIPs)
- Hybrid mutual funds: 70–80% in debt, 20–30% in equity.
- Income via monthly dividend or SWP; returns market-linked.
- Annuity Plans & Government Pension Plans
- E.g., Atal Pension Yojana, NPS annuity options—guaranteed monthly pension.
Key Features
- Regular payouts: Monthly income for living expenses.
- Low to moderate risk: Mostly debt investments; MIPs include some equity.
- Liquidity: Varies—POMIS has 5-year lock-in; mutual funds are more flexible.
- Professional management: Fund managers handle debt/equity mix.
Benefits of Monthly Income Plans
- Steady cash flow: Helps retirees and conservative investors.
- Capital preservation: Most money in low-risk instruments.
- Potential better returns: POMIS, SCSS often beat regular FDs.
- Flexibility: Choose schemes based on risk, returns, and payout needs.
- Tax advantages: Some plans like SCSS, annuities offer tax benefits; mutual funds taxed based on holding period.
Quick Comparison
| Scheme | Risk | Payout | Liquidity | Tax Implication |
|---|---|---|---|---|
| POMIS | Low | Monthly | 5-year lock-in | Interest taxable |
| FD MIS | Low | Monthly | Pre-withdrawal penalty | Interest taxable |
| SCSS | Low | Quarterly | 5-year lock-in | Section 80C deduction |
| MIP Mutual Funds | Moderate | Monthly/SWP | High | STCG/LTCG rules |
| Annuity Plans | Low | Monthly Pension | Locked life term | Depends on plan |
Example: ₹9 Lakh in POMIS
- Invest ₹9 lakh at ~7.4% annual interest → ₹5,550/month income.
- Guaranteed, low risk—but interest is taxable.
Is an MIP Right for You?
- Choose based on age: Retirees may prefer SCSS/POMIS.
- Choose based on risk appetite: MIPs offer moderate growth.
- Choose based on liquidity needs: Some schemes lock money in.
