Are you looking to invest a lumpsum such that you can earn a monthly income? From simple bank fixed deposits (FDs) to systematic withdrawal plans (SWPs) in mutual funds, there are a handful of options. Here’s a low-down on the products and their suitability for various investors.
Safe-haven choices For those who don’t have any appetite for risk, the post office monthly income scheme (POMIS), which is open for all age groups, and the Pradhan Mantri Vaya Vandana Yojana (PMVVY), eligible for those aged 60 and above, are the safest options. These products have an implicit government backing.
If you don’t mind quarterly payouts, the post office Senior Citizens Savings Scheme (SCSS) is a good choice for seniors.
Post office MIS: The POMIS currently offers an interest rate of 7.6 per cent per annum. However, the investment amount is capped at ₹4.5 lakh per person. In the case of a joint account, investment can be up to ₹9 lakh.
While the POMIS has a maturity period of five years, premature withdrawal is allowed after one year, post deducting 2 per cent of the deposit. However, if the withdrawal is made after three years, only 1 per cent of the deposit is deducted.
Interest on Post Office Savings Schemes is taxable at slab rates under the head ‘Income from Other Sources’ (IOS).
PMVVY: Another choice for seniors is the monthly payout option in PMVVY. The scheme currently yields 8 per cent return per annum for this frequency. The tenure is fixed for 10 years.
The minimum and maximum investment amounts (purchase price) are ₹1.5 lakh and ₹15 lakh respectively, for monthly payouts. If you are fine with the quarterly payout option, you can invest in the SCSS as it offers a higher rate of 8.6 per cent.
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