Best Monthly Income Plan (Guaranteed Income)

POSTED BY Viral D ON December 19, 2012 1:30 pm COMMENTS (5)

I have fund of Rs. 5,00,000/- which I want to invest for regular passive income for my wife (Just because after all the deductions & investments, I fall in to 20% tax bracket). Reason for choosing Monthly Income Plan is only that I don’t have time to monitor that fund in particular.

Which are the best possible options to me?

Bank with option of netbanking for tranferring interest to my Acc is preffered.

P.S. I don’t want to go for any market based plan for this fund.

5 replies on this article “Best Monthly Income Plan (Guaranteed Income)”

  1. SWPs will give regular income but will lead to loss of capital so it is regular while it lasts1
    SWPS with payout from appreciation will not give regular income but will protect capital

  2. Viral D says:

    What is SWP? Where I can get more info on that?
    Yes, I need to be regular fixed amount.

    1. Ramesh says:

      SWP = Systematic Withdrawal Plan.

      In this, you put your whole amount (5L) in a debt fund, and then start a SWP from it on a fixed date for a fixed amount of money.

      Why is it better than a simple monthly dividend payout? Because:
      1. Your tax liability is lesser, in case you come under any tax bracket. And if you dont (for your particular case), then you dont pay the dividend tax (the AMC has to pay it, and then it gives you the money; effectively you have paid some tax eventually).
      2. You can have a Fixed amount and not dependent on the amount of dividend declared by the AMC.
      3. The rest of all your money keeps on increasing in compounding manner.

      Read up more on that.

      http://www.wisegeek.com/what-is-a-systematic-withdrawal-plan-swp.htm

      http://www.hdfcfund.com/InvestPlans/ContentDisplay.aspx?ReportID=D422D959-A04B-4CEE-ACA1-449D260508A6

  3. Ramesh says:

    What are the requirements of the monthly passive income?

    Is it any amount or any fixed amount?
    And does it need to be regular?

    A SWP from a debt fund is the best thing for you, in my opinion. No equity exposure, no dividend taxation and ease of use.

  4. Possible with all Bank FDs. interest rates may vary, TDS deduction forms should be given each year which is a pain. Some banks do a TDS and the return the money in a couple of weeks.

    post office monthly income scheme is another option. Although offline does not have TDS problems best if income for wife is always going to be below taxable limits.
    Money wil get credited to post office SB account. You can use cheques to take the money out. Likely to become online soon.

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