Having a regular income stream is essential to meet daily expenses. Irrespective of your area of work, financial planning is crucial to meet all expenses and bear inflation. Most of the schemes that generate a future monthly income are investment-based. It essentially means that you put aside a certain sum for which you get a regular payout either upon maturity or immediately with a lump-sum payment.Read more
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Let us scout for all the available options to earn 5000 per month and provide financial stability.
Banks have been the backbone of the Indian financial industry. Moreover, banks have a presence across the country, catering to different financial needs of their customers with utmost safety. Bank deposits are protected under DICGC cover that ensures fund safety. Thus, you can invest in a monthly income fixed deposit scheme for regular interest payout.
The key highlights of the scheme are:
Flexible Tenors: You can deposit in tenors from 7 days to 10 years. However, the minimum tenor for the monthly income deposit is 12 months.
Interest Rates: The applicable interest rate varies from 2.85% to 5.05% pa in public sector banks. It is applied quarterly with a compounding benefit.
Preferential Rate: Senior Citizens are paid 0.50% higher interest over the card rate.
Maturity Value: You get back the invested principal on maturity.
Investment Amount: At the above-quoted rate, you must invest Rs. 12 Lac to earn a monthly income of Rs 5028.75.
India Post provides banking services besides performing their postal responsibilities. They have a tailored monthly income scheme where the accrued interest is disbursed every month for a steady income stream. Risk-averse individuals can explore the scheme across their offices spread all over India.
The scheme’s salient features are:
Tenor: 5 Years
Account Operation: Single or joint
Amount Limit: maximum investment - Rs 4.5 Lac for single account and Rs 9 Lac for joint account
Interest Rate: Current rate - 6.6% per annum (Rs 55 per Rs 10,000 investment)
The government introduced NPS in 2004 for its employees but later extended it to all Indian citizens. According to the NPS rules, you must register first to receive a PRAN card and then open Tier 1 and 2 accounts. The contributions are deposited in the Tier 1 account (mandatory to hold).
A percentage of your salary is deposited in the account every month with a matching employer’s contribution. While you can transact from the Tier 2 account at any time, withdrawals from Tier 1 account are restricted.
The salient features of NPS are:
The account matures when the subscriber turns 60.
Upon maturity, withdraw 60% of the accumulated corpus in a lump sum.
The remaining 40% is reinvested in a suitable annuity with approved insurers.
Pension Calculation: You can calculate your future monthly pension using the online NPS calculator. Let us check it out for clarity.
Entry Age: 35 years
Retirement Age: 60 years
Investment Period: 25 years
Monthly Contribution: Rs.1000
Expected NPS Return: 8%
The following is the outcome displayed instantaneously with the above inputs and assumptions.
NPS Corpus Reinvested in Percentage: 80%
NPS Corpus Reinvested in Amount: Rs.759349
NPS Corpus Withdrawn in Amount: Rs. 189837
Projected Pension: Rs. 5062
The government-sponsored APY scheme was launched in 2015 to offer financial security to the unorganized sector. A pension cover of Rs 1000 to 5000 per month is offered to the policyholder upon its maturity. PFRDA administers the scheme, paying pension based on the contribution during the tenor.
The key highlights of the scheme are:
Indian citizens from 18 to 40 years can subscribe to the scheme.
The subscriber must compulsorily hold a KYC-compliant bank account.
Government contributes 50% of the subscriber’s contribution or Rs 1000, whichever is lower.
The subscriber must not be covered under any other social security scheme and must not be a taxpayer.
The government contributes to a policy for a maximum of 5 years.
Contributions also continue during the accumulation years through monthly, quarterly, or half-yearly installments.
An 18-year old must contribute Rs. 210 per month for 42 years to receive a monthly Rs. 5000 pension after turning 60. In addition, the nominee will receive Rs. 8.5 Lac pension corpus after the subscriber’s demise.
Mutual funds have emerged as one of the most popular investment vehicles for gaining higher returns. Under this, multiple people pool their money to diversify investment and create a portfolio of market-linked instruments.
Different asset classes bear distinctive risk profiles to deliver higher returns. For example, debt instruments are low-risk assets returning fixed income. On the other hand, equities are high-risk vehicles subject to market volatility but offer higher yields. Hybrid funds are a balance of equity and debt instruments that are only slightly affected by market volatility.
In addition, mutual fund schemes operate in two models – regular and growth. Dividends are paid in the former while the yield accumulated is reinvested in the latter. It invokes a Systematic Withdrawal Plan (SWP) for a fixed-amount monthly income stream while the fund grows in the long term.
Bonds are issued for raising funds for a specific purpose. For example, governments issue bonds to fund infrastructure projects while corporations issue them to fund their projects. Bonds are issued for definite maturity buckets up to 40 years, paying coupon rates higher than banks and post offices.
You can trade bonds in the secondary market, although otherwise illiquid. RBI tweaked its policy on bonds in November 2021 to open the investment window for retail investors in recent development. In addition, accrued interest is paid every month or quarter according to the RBI stipulation.
It is prudent to diversify the bond portfolio to protect your investment, though less volatile than other market instruments. In addition, you are assured of a predictable income in compliance with RBI guidelines.
An annuity is an insurance product that provides guaranteed income for life. It offers tax advantages, easy payouts, investment protection, and helps in building a corpus. Therefore, annuities are ideal for retirement planning for financial stability and independence.
The annuity purchase price is based on your income needs in two models – immediate and deferred. In the former, the pension payout starts immediately on investment, whereas for the latter, the payout commences at a future date.
Key takeaways in the investment vehicle are:
Future payments are dependent on the type of annuity purchased.
Annuities support long-term income strategies rather than the short-term
Annuities are capable of inflation adjustments.
Your Rs 7.5 annuity purchase with an 8% return rate fetches a monthly pension of Rs 5,062.
Guaranteed income life insurance plans are ideal for individuals looking for a secure income source after retirement. In addition, the scheme helps supplement one’s income with a fixed monthly stream. According to a predefined schedule, the insurance plan delivers a fixed income for a specified amount. Thus, it essentially combines insurance risk and financial security on retirement.
Life insurance policy key takeaways are:
The income is expressed as a percentage of the sum assured or the annualized premium.
The payout commences after the premium payment term for the limited-pay plan option.
The payout commences after the policy’s maturity for the regular premium payment option.
On the other hand, the payout commences after the policyholder’s demise for a fixed number of years or until the tenure’s end as defined in the policy document.
The plan provides an additional source of secured income.
Your household financial balance can be in jeopardy in the absence of security, especially after retirement. Thus, your financial planning for post-retirement life should begin early during your active working phase. Accordingly, choose from a wide array of investment vehicles to ensure financial stability when you retire or provide for a steady income stream to supplement your earnings. The clinching factors in all the investment vehicles are your financial resources and risk appetite.
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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