Generating regular income with NSC & MIS – Is this the right way?

POSTED BY Manoj Kulkarni ON November 16, 2011 12:05 pm COMMENTS (3)

Further to the article of 10 ways to generate regular income, I have following scenario for financial planning to get regular income of ~Rs.15000 pm after 5 yrs from today:

1. I invest Rs. 18000 pm in NSC for next 5 yrs
2. If there are 2 members at home, then I invest Rs. 900000 in MIS.

After 5 yrs, per month, I will start getting ~Rs. 27000 from NSC & I keep on getting ~Rs. 6000 from MIS. I continue to reinvest Rs. 18000 from NSC that gets matured. Thus, I get an income of ~Rs. 9000 from NSC + ~Rs. 6000 from MIS, thus a regular income of ~Rs. 15000 pm.

As both the schemes are run by govt, thus are having very low risk but the ROI is also less and is not going to be tax free. Also, depending on the capacity of each person & members at home, the amount(s) may change.

Overall, I would like to know can this option be a good way for regular income or not?

3 replies on this article “Generating regular income with NSC & MIS – Is this the right way?”

  1. Dear Manoj, I assume you do not require money in between before that 5Y term completes. My take for a gtd. return under the current high interest rate scenario –

    Invest those 9L Rs. in a bank FD for 5Y period. SBI is offering 9.25% for non Sr. Citizen & 9.75 for Sr. Citizen (opt which ever is applicable to you, you may check with your existing bank also). @ 9.25% & qtly compounding, the maturity amount after 5Y ‘ll be 1421728 Rs.

    For those 18K mly NSC purchase, Again I’ll ask you to open a bank RD of similar amount for 5Y period again you ‘ll get 9.25 or even more depending upon the bank selected by you. @ 9.25% the 5Y Rd ‘ll mature to 2342983 Rs.

    Total amount at the end of 5Y term ‘ll be 3764710 Rs. At that time you may decide how much to invest in MIS & in other instruments to generate regular income. The interest rates at that time may decide the line of action.

    For simplicity of the calculation – Income Tax liability on the interest amount has not been discussed as interest from all 4 instruments is taxable.



  2. Manoj – There is an interesting write up by Manish and a very healthy discussion/comments on the regular income options. Just give this a read.

  3. Abhishek says:

    Hi Manoj,

    Considering the present interest rate situation, Post Office MIS and the NSC is giving less than the nearby bank.

    You can look at Fixed Deposits of Longer Tenure ie 3 years or more from Banks which are offerring 9.5 – 10.5% return. Also, look at AAA Rated Corporate Fixed Deposits which can give you better returns for regular monthly income.

    5 yr tax saving deposits can be taken instead of NSCs for tax saving purposes.


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