Skip to main content

Monthly Income Investment Options

 

After retirement, income stops but expenses don't and only saving cash is not enough as inflation erodes the value of money and some expenditure like medical expenses will rise. All of us may not be able to earn throughout our life but we definitely need money throughout to meet our living expenses. It is important to establish a regular income stream post retirement so that life after retirement is comfortable. There are various options in the market that allow us to earn regular income. Let us look at them and compare them:

Factors

Nationalized Bank Fixed Deposits.

Varishtha Pension Bima Yojana

Postal MIS

Pension Plans – Jeevan Akshay VI

What is it?

The investor can invest money in a fixed deposit in a bank for a certain duration and earn interest on the same.

LIC has launched this pension plan. Its aim is to provide a regular income to the senior citizens of the country.

Post Office Monthly Income Scheme is a post office investment scheme that gives an assured monthly income.

Jeevan Akshay VI is a pension plan wherein the investor purchases the plan by paying a lump sum amount and gets annuities periodically. It is an annuity plan.

Key Features

Fixed Deposits (FDs) allows an investor to invest a lump sum amount and earn income at a higher interest rate than Savings Accounts.

One can invest in FDs from a minimum of 7 days to a maximum of 10 years.

Interest is calculated on a compounded basis.

At the end of the FD tenure, the principal and interest is returned to the investor'

The individual has to be 60 years or more and for a monthly pension the minimum purchase price is Rs. 66,665 and the maximum is Rs. 6,66,665.

The policy can be surrendered after 15 years for a full refund and at 98% in case it is surrendered for any emergency purpose before 15 years have passed.

POMIS is a risk free investment scheme with a minimum investment of Rs. 1500. The maximum amount is Rs. 4,50,000 for individual accounts and Rs. 9,00,000 for joint accounts.

An interest of 8.5% p.a. is paid

The maturity period is 6 years and a bonus of 5% is given if you remain invested in it for 6 years.

LIC's Jeevan Akshay VI is a single premium pension plan wherein on payment of the sum, a regular income will be paid to the investor from the next time interval.

A person between the ages of 30 and 85 years can purchase this plan from LIC with a minimum amount of Rs. 1,50,000. There is no upper limit. He/She will get the periodic annuity (monthly, quarterly, semi-annually or yearly) depending on the type of plan purchased.

There are 6 plan options to choose from and the policy termination, refund of purchase price and nomination features depend on the plan chosen.

Payment Mode

The monthly interest can be credited to the savings account. It can be given quarterly, semi-annually or annually as well.

Payment is done through ECS/NEFT.

The payment can be taken from the post office or it will be transferred electronically to your bank account.

There are various modes of payment for getting the annuity.

Returns

Interest rate varies depending on duration, amount and Bank.

Interest rate is around 9%-9.38%

Interest rate is 8.5% per year.

The annuity payable for life increases at a simple rate of 3% p.a. The insured person is also eligible for bonuses declared after 6 years of the policy.

Risk

It is a less risky product and the investment up to Rs. 1,00,000 is guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

It is not a risky product as the Government backs it.

There is no risk involved.

It is a very low risk product.

Benefits

FDs with a tenure of 5 years or more qualify for deduction under Section 80C of Income Tax Act.

Senior citizens get an additional 0.25%-0.5% on the regular interest rate.

A regular stream of income is provided to the senior citizen.

If the policy owner dies, the entire purchase amount is refunded to the nominee.

Premium paid for this plan for senior citizens, is exempt from service tax

It is a secure regular stream of income.

The account can be transferred easily from 1 post office to another.

If the plan purchase price is Rs. 2,50,000 or more, higher incentives are available.

Online purchase also gives a rebate by increasing the annuity rate.

It is a hassle free investment option for senior citizens falling in the 10% tax slab.

What is not so good about it

Tax saving FD are illiquid

Rate of Interest can change and inflation can erode the value of the interest earnings.

The maximum limit is not high enough. There are no tax breaks on it. It is illiquid in nature.

There is a penalty if you take the money out before the completion of 1 year of the investment.

The investor cannot take a loan against it. There is no option to surrender the policy. Inflation is not considered in the plan returns.

Taxation

The interest earned on the fixed deposit is taxable.

If the interest income on a fixed deposit exceeds Rs.10000 in a year, tax will be deducted at source along with education cess.

Investments in the pension plan do not qualify for deductions.

Interest earned in taxable at the tax slab that the investor falls under. There is a service tax of 3.09% on the premium amount.

It does not qualify under Section 80C.

Income received is taxable as per the income slab that the person falls under.

Premium paid for purchase of plan is exempt from tax.

1/3rd of the maturity value received is exempt from tax

Income received is taxable as per the income tax slab the person falls under

Comments

It is good for investors falling in the 10% income tax slab and those who do not mind the lock-in period.

Investors in the higher income tax slabs will not find the returns attractive.

It is a good investment option for senior citizens looking for a regular stream of income with no risk involved. Some money can be invested so that investments are diversified.

There are many insurance companies with pension plans. The investor should compare different options and buy the one that suits his requirements. The returns do not match the inflation rate, which means you can lose money here.

 

 

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now