You might be thinking why I am taking a figure of Rs. 25 lakhs as savings to turn it into monthly income. This is just an assumption, it can vary from individual to individual. This scenario i consider when you have no other liability or just want to invest to get a stable and safe monthly income
In this post, we will discuss various investment avenues that can generate a comfortable monthly income with strategic investment options to help you achieve your goal of financial independence.
Understanding Your Risk Appetite
Before starting, it’s crucial to assess your risk tolerance. Are you comfortable with potential market fluctuations for higher returns, or do you prioritize stability with lower returns? What are your financial goals? What are future plans? This will guide your investment choices.
This cannot be answered by any financial advisor. You have to evaluate and assess yourself. How much you know about financial markets and investment instruments. You don’t want to lose much of your money for higher risk, so go for stable returns with lower risk.
Once you have evaluated this, you can proceed to know the financial instruments that can provide stable and safe income. If you want to invest monthly for your goals.
Read to know how can divide savings in better way
Investment Options for Monthly Income
I will elaborately discuss two types of investment – For low risk takers and another for high risk appetizers. This is for those who want to invest their lump-sum saved money for stable income.
For low risk takers:
A. Post Office Monthly Income Scheme: This is Government backed scheme and interest rate for 2024-25 is fixed at 7.4% per annum in which you get monthly payout of interest amount. Interest rates are decided by the Government every year, so it keeps on changing.
B: Fixed Deposit: Presently FD rates are high and it gives a good opportunity to invest. You can get a 7-8% return depending on tenure. Moreover, the small finance banks or NBFCs are giving 9-10% interest rates. It is one of the oldest and safest modes of investment.
C. Senior Citizens Savings Scheme Account(SCSS): It is one of the Post Office savings schemes backed by the Government for senior citizens. Interest of 8.2% per annum is fixed for 2024-25.
D. Debt Mutual Funds: These mutual fund houses invest in Government securities and bonds which are safe and secure but give less returns compared to equity linked mutual funds.
For Medium or Higher Risk takers:
For higher risk appetite for money, one can easily invest in stocks or mutual funds with equity exposure. But, fundamentally it is not suggested to those who have no knowledge of equity and risky investment instruments and do not have backup money plans.
But for medium risk takers, it is suggested –
A. Hybrid Mutual Funds: They are a combination of equity and debt investment, and few mutual funds also include gold or even real estate investments. You have to invest precautionary checking wisely the distribution of funds. Don’t be lured by the past performance.
B. Dividend Yield Mutual Funds: These funds are designed to offer quarterly, yearly dividends to their investors. Interest is divided and paid back to you keeping the principal amount invested. You can search different dividend mutual funds on upstox.com (not sponsored)
Read more – Unlock Wealth with My Unique Annual SIP Investment Strategy
C. Gold in SGB: RBI offers Sovereign Gold Bond and pays yearly 2.5% on investment with appreciation of value in investment linked to Gold’s market price. You can also invest in Gullak App which offers a 3% interest.
D. Equity Linked Mutual Funds: You can invest a small portion in Mutual funds having equity exposure more than 70% and use strategy to withdraw after one year and reinvest the principal and keep the interest as your earning.
- You can also save tax on Rs. 1 lakh of profit earned on equity linked mutual funds. Read the full article – Tax implication of Short term capital gain and long term capital gain
My formula to turn Rs. 25 lakhs into monthly income
I will divide the amount with safe and comfortable returns.
| Investments details | Amount | Returns expected |
| Dividend Yield Mutual Funds (with yearly payout) with 5 lakh each in single mutual funds with 10% returns | ₹10,00,000 | ₹1,00,000 (yearly) = ₹8334 (approx per month) |
| Fixed Deposit with 7.5% with quarterly payment & make 5 FDs of 1 lakh each with each year maturity | ₹5,00,000 | ₹3125 approx monthly |
| Gold investment with Gullak App or SGB by RBI | ₹5,00,000 | ₹12500 (yearly) = ₹1050 (approx monthly) |
| To avoid risk invest in Post Office Monthly Scheme with 7.4% interest, otherwise, invest in Equity Mutual Funds with Growth Plan and have option to withdraw investment after one year with 10% tax | ₹5,00,000 | ₹ 3,083 per month in POMIS |
| Total | ₹25,00,000 | Approx ₹1,80,000 yearly = ₹15,000 per month |
Conclusion
Always remember returns are not permanent and no one guarantees for future returns based on past performance. Investment varies individual to individual and his/her financial goals and risk appetite. I have already shared my formula to distribute the money with the potential of getting a good return on it. This is only my assumption as per my experience, you can create according to your needs and financial goals.
If required, you must take help from a registered financial advisor to invest rightly and save your hard earned money.
