MONTHLY INCOME PLAN

Monthly income plans always give assurance to the people. Consistent income can help an individual plan up for the future. It is a secured way of earning which provides consistent financial growth to an individual without any uncertainty. If you want to earn on a monthly basis then keep reading....

A type of hybrid fund, where the investment is allocated between equity and debt in a ratio of 20:80 (approx) respectively.

The main feature is to provide the investor with periodic payouts on a monthly basis. It is an ideal investment tool to beat inflation at minimal risk. It has an edge over its conventional alternatives as bank FDs and Post Office MIS (Monthly Income scheme), due to its return rate of 11-14% compared to FDs and MIS of 8-9%. It also has no limit on the investment made and no entry charge, though it has an exit charge of 1.0%, having no lock-in period, it provides higher liquidity. In MIP, the interest rate and NAV are inversely proportional. Thus the best period to invest in MIP is when the interest rate is high. There are different types of MIP, namely Dividend based MIP, and Growth based MIP. It is best suited to risk-averse investors who like to stay in between the safe zone of debt funds and the risk zone of equity funds. Among the few is a retired person. First-time investors can also take the jump.

Some more information about the Monthly Income Plan.

MIP (Monthly Income Plan): It is a kind of hybrid fund (mutual fund) where the investment is allocated proportionately between equity and debt marketing in the ratio of 20:80.

In simple words, it is a debt-oriented mutual fund, with a periodic return.

FDs: Fixed deposits are fixed-term investments made with a bank, which earn interest at a fixed rate on the capital invested. The entire sum of money, capital plus the interest earned can be easily redeemed at the end of the term. People also have the option to make an early exit in between the term but they lose interest rate, also the rate which is lower than MIP.

MIS (Monthly Income Scheme): The MIS is a monthly earning scheme with Post Office, where investor earns a fixed monthly income on their investment. It is good but due to the lower rate of interest, the switch is on MIP, which yields a higher rate of interest.

F.A.Q

WHAT IS THE ROOT OF MIP?

MIP falls under the hybrid funds and thus the roots lie in there. It behaves as a typical hybrid fund and allows good returns compared to FDs and MIS. A very good option for first-time investors and for people who wants to play safe.
WHAT IS DIVIDEND-BASED MIP?

These are for those who want monthly payouts of dividends. Though the dividend that is earned is tax-free, but the dividend amount that the investors end up getting is actually the earned dividend less the 14% dividend distributed tax.
WHO ARE THE BUYERS FOR MIP?

The best buyers are those who are averse to taking risks and also want to earn a regular return on their investment. It is for the safe players and little risk takers. Retired people or those who are first-timer investors are most likely to benefit from this.
WHAT ARE THE BEST PERFORMING MIPS?

It is a dynamic investment option, where no MIP (Monthly Income Plan) can top the list every time. But any good-performing MIP will yield a substantial return in the range of 10-13%.