10 Best Investment Plan for Monthly Income 2025

Of late, mutual funds have become one of the most popular investment avenues among different types of investors. Apart from delivering inflation beating returns and helping them to create a long-term corpus, mutual funds also have the capability to provide a regular stream of income to the investors. Read on to know how.

By investing in MIP mutual funds, also known as the regular savings funds, you can create a regular stream of income for yourself. These mutual funds are actually debt or hybrid funds with an option of monthly dividend payout. Most of these funds are conservative in nature and involves only 10-20% investment in equity while the rest 80-90% are invested in safer debt instruments.Though they cannot provide very spectacular returns due to a limited exposure to equity, they are usually good enough to provide inflation-beating income to the investors. These schemes are popularly viewed as an alternative to other fixed income bearing instruments such as Fixed Deposits (FDs) , Public Provident Fund (PPF) etc.Additionally, MIP mutual funds also score over fixed deposits from the taxation point of view. While the income from fixed deposits are taxed every year even though you’ll gets your money only at the time of maturity, gains from MIP mutual funds are taxed only if you want to redeem your investment and not if you reinvest your earnings.

Another way to ensure a regular flow of income from mutual funds is through a Systematic Withdrawal Plan (SWP) . Similar to the Systematic Investment Plan (SIP) which allows the investors to invest periodically in mutual funds, SWP empowers them to withdraw a specific amount of money at fixed intervals of time.For example, you can choose set-up a SWP to withdraw Rs. 15,000 from your pool of mutual fund investments on 10thof every month for the next five years. As per the Net Asset Value (NAV) of each unit on the pre-determined date (10thof every month in this case), a number of mutual fund units amounting to Rs. 15,000 will be redeemed automatically and the proceeds will be transferred directly to your bank account via NEFT.In case, you choose to redeem your mutual funds via SWP within 3 years from the date of its purchase, the gains will be treated as short-term gains and will be taxed according to the existing income tax rules. However, withdrawal made after 3 years from the date of purchase will be considered as long-term capital gains and will attract a tax of 20%.

Consider your monthly cash flow requirements and tax efficiency to determine whether you should opt for the dividend route or the SWP route to create a stream of monthly income from mutual funds. While income from the MIP funds are not fixed or guaranteed, SWP offers fixed regular income at normal income tax rates.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.