monthly income scheme

Mithun asks,

My mom will soon be receiving a lumpsum (around Rs 300,000). How do I invest this lumpsum in her name in order to generate some monthly income? I’ve heard about Monthly Income Plans (MIP). Are they a good option?

Yes. Monthly Income Plans are the way to go — but I’d recommend that you opt for a Monthly Income Scheme from the neighboring Post Office (PO MIS; fixed and guaranteed monthly income) as opposed to a Monthly Income Plan from a Mutual Fund (variable and non-guaranteed monthly income).

For Rs 300,000, the income from the PO MIS works out to Rs 2,000 each month. Capital preservation plus a guaranteed monthly income. You can’t go wrong with the PO MIS.


A friend asked,

I’m in the midst of changing jobs and have opted to withdraw the savings in my Employee Provident Fund. It’s a decent sum — around Rs 300,000 — and I wish to keep this money safe. Is there a way I can achieve this and yet earn a steady income?

My immediate answer was a fixed deposit with periodic interest payouts, but my friend has been investing in tax-saving fixed deposits and was looking to diversify. My next suggestion was the Post Office Monthly Income Scheme. And, in case you don’t need the monthly income, automatically roll that amount into a Recurring Deposit.

What would you suggest?