Where to invest money to get monthly income

We do not give specific investment advice. Your investment choice should be based upon your income needs, your current and required asset allocation and other specific requirements that you may have. You can choose between balanced funds, monthly income plans and income, or a combination of the two or more, for your monthly income needs.

Balanced funds have 65% to 70% allocation to equity and 30 to 35% allocation to debt. Monthly income plans have 25 to 30% allocation to equity and 70 to 75% allocation. Income fund have 100% allocation to debt. Historically, Balanced funds on an average have given13% annual returns over the long term. Monthly income plans on an average have given 11% annual returns over the long term.

Income funds on an average have given 8% returns over the long term.

To get monthly income, you can choose between dividend option or Systematic Withdrawal Plan (SWP). Your choice should be informed by your tax situation. If you are in the highest tax bracket, the dividend option will be more tax efficient. If you are in lower tax bracket, then SWP from the growth option of the funds will be more tax efficient. The other advantage of SWP is that, you can draw any fixed amount on monthly basis, depending on your income needs. In the dividend option, the dividend amount is not fixed and there is no assurance that you will get monthly dividends. However, some balanced funds and monthly income plans have an excellent track record of monthly dividends.

We have given a general guidance. You should discuss your investment objectives, financial and tax situation with your financial advisor, to make the correct investment decision.