Best Monthly Income Schemes:

You can earn a decent monthly income after your retirement or even before it by investing your earnings into securities.

They are Post Office Senior Citizen Schemes, Systematic Withdrawal Plans, Bonds, Fixed Deposits, etc. You can obtain a brief description of them in the coming up paragraphs.

1. Post Office Senior Citizen Scheme:

Post office runs a monthly income scheme for the senior citizens who have attained 60 years and above. The scheme awards an interest rate of 8.0 percent with effect from 01.01.2023.

You can deposit anytime in the months of 31st March, 30th September, 31st December in a year and the interest will be payable on 31 March, 30 June, 30 Sept, 31 December.

You can open an account and deposit in the multiples of INR 1000/- and maximum deposit amount is INR 15 lakh. You will be provided a benefit of section 80C of Income tax act 1961.

Important Note:

You are advised to claim the interest payable every quarter and in case you fail to do it, the accumulated amount shall not attract any additional rate of interest.

You can seek your interest through an auto credit into a savings account at the same post office.

You can attempt premature closure, account closure on maturity, and even extend the existing account.

The senior citizen scheme is for a period of 5 years and if you intend to close the account the scheme will apply a penalty and let you close the account.

Within one year of account opening, you will have to forgo the interest paid from the principal amount.

If you are intending to close between one year and two years then you will have to forgo 1.5 percent from the principal amount.

If you are willing to close the account after 2 years and before 5 years from the date of opening then before the scheme is closed down the Post Office will deduct 1 percent from the principal amount and the balance shall be remitted to you.

You can extend the account for a period of three years and such an extension is possible within one year of the maturity date. You will be provided with an interest rate that is applicable on the date of maturity.

2. Systematic Withdrawal Plan in Mutual Funds

Systematic Withdrawal Plan, SWP can provide a regular flow of income from the mutual fund investment. Experts say it to be a wise investment because the fund can be redeemed easily, and the withdrawn fund is not taxed at the source.

Careful planning of the withdrawal funds can help you in skipping the taxation. You can withdraw the gains ( dividend) and retain the invested capital and likewise you can benefit from it.

You can make fixed withdrawals from your investments monthly, quarterly, bi-annually or annual basis.

You may have your investment of mutual funds in debt funds/equity funds, or a combination of both. The tax implications differ and are dependent on the nature of funds.

3. Bonds:

Bonds are issued by entities such as Central/State governments/RBI/banks/corporate and the investors loan the money at a formal rate of interest for a specific duration of time.

State/Central Government Bonds:

There are several kinds of bonds made available for you and they are treasury bills, cash management bills, dated government security, fixed rate bonds.

In addition you can obtain floating rate bonds, zero coupon bonds, capital index bonds, inflation indexed bonds, bonds with call or put option, special securities, strips, sovereign gold bonds, SGBs.

State Development Loans (SDLs):

These loans are preferred and issued by the state governments to meet the budgetary requirements.

RBI does the regulatory operations and this security is released in the markets for every 2 weeks. However, you can notice that the interest rates of the SDL are higher than dated government bonds. The interest rates are mentioned only at the time of auction.

Government of India Saving Bond:

In 2018, the government of India released GOI saving bonds at a rate of interest @7.75 percent which was earlier at 8 percent on saving bonds.

These bonds can be held by individuals, minors under legal guardianship, and with the hindu divided family.

The bonds are taxable under the Income tax act 1961 as per the income tax slab rates. You can make the investment in multiples of INR 1000.

4. Bank fixed Deposits:

Another financial institution that provides an income on your investment. The banks irrespective of public sector/private/cooperatives attract you by offering fixed rates of interest for different tenure. It could be for 45 days, six months, one year, and above.

These fixed rates of interest keep changing and banks are expected to operate as per the regulations set by Reserve Bank of India, RBI.

Fixed deposit interest rates differ from small finance banks, private sector banks, and public sector banks. In addition, you can also opt for a tax saving fixed deposit.

To illustrate an example, fixed deposit interest for small finance banks for 1-year/2-year/3-year tenure are in the following manner, AU Small finance Bank( 1-year, 6.10: 3-year, 7.75: 5-year, 7.20).

Fixed deposits in private banks such as Axis bank for 1-year, 3-year, and 5-year are likewise, Axis Bank (1-year, 6.75 : 3-year, 7.00: 5-year, 7.00).

Fixed deposits for public sector banks for 1 year, 3-year, and 5-year tenure of Bank of Baroda are as follows. (1-year, 6.75; 3-year, 6.75: 5-year, 6.25).

Banks also provide fixed deposit tax free for citizens and senior citizens too. For instance, AU Small Finance Bank ( General Citizen, 7.20: Senior Citizen, 7.70).

Advantages of Fixed Deposits:

You can have guaranteed returns on investment, and as your investment is invested in debt markets your capital is protected.

In addition, you can have a tax deduction under section 80C, seek a loan against your fixed deposit, and even acquire credit card against fixed deposit.