Best Investment Plans For Monthly Income

Achieving a steady monthly income is one of the most effective ways to secure financial stability and build a sustainable lifestyle. Ongoing income from investments can help cover daily expenses, supplement your salary, or fund your retirement.

Whether you are looking for stable returns, low risk, or tax-saving benefits, there are a variety of investment options to help you achieve these goals.

With numerous monthly income investment options available, choosing the right one depends on your financial goals, risk tolerance, and time horizon.

In this guide, we will explore some of the best investment plans for monthly income, with detailed explanation of their key features, benefits, and considerations to help you make informed choices.

List of Best Investment Plans for Monthly Income

With a steady monthly income, you gain the flexibility to pursue goals and enjoy a higher quality of life without worrying about monetary limitations. 

Here is the list of best options available for investment with monthly returns or income:

1. Fixed Deposits (FDs)

Fixed Deposits are one of the safest investment options, where you deposit a lump sum with a bank or financial institution for a fixed tenure. In return, you receive guaranteed interest payouts at regular intervals. 

The interest rate is predetermined and remains unaffected by market fluctuations, ensuring predictable income. 

You can choose flexible payout frequencies, such as monthly, quarterly, or yearly. With no risk to your principal amount, FDs are ideal for conservative investors who prioritize safety over high returns. 

Premature withdrawals are possible but may cause penalties.

Key Details:

• Interest Rates: 6%–8% annually (varies by bank and tenure).
• Tenure: 7 days to 10 years.
• Minimum Investment: ₹1,000.
• Risk Level: Low.

Best For:
This is the best investment plan for monthly income for risk-averse investors seeking guaranteed and stable returns.

2. Post Office Monthly Income Scheme (POMIS)

POMIS is a government-sponsored plan to provide fixed monthly income to investors. This plan is suitable for those who want secure and stable returns without market-linked risks.

You invest a lump sum amount at tenure period of 5 years with monthly interest payouts.

It allows premature withdrawal after one year, but penalty charges apply.

A joint account can be opened for higher limits making it apt for a family as well.

Key Details:

• Interest Rate: 7.4% per year (current rate)
• Tenure: 5 years; early withdrawal subject to penalties
• Maximum Investment: ₹9 lakh (joint account); ₹4.5 lakh (single account)
• Risk Level: Low

Best For: Investors looking to have guaranteed monthly income with no risk to the market.

3. Senior Citizen Savings Scheme (SCSS)

SCSS is for only those people who are 60 years or above to have a steady income after retirement. This government-backed scheme provides one of the highest interest rates associated with fixed-income instruments, besides, it provides quarterly payouts to meet recurring expenses.

The lock-in period is five years, and can be extended by another three years upon maturity.

Its most suitable for retirees, who are willing to allocate a small portion of their saving towards fixed predictable returns. It also helps them to avail tax benefits under section 80C of the income tax act.

Early withdrawals are allowed, however, there may be penalties based on the tenure completed.

Key Details:

• Interest Rate: 8.2% (annualized, current rate).
• Tenure: 5 years (extendable for 3 years).
• Maximum Investment: ₹15 lakh in each individual account
• Risk Level: Low; government-backed.

Best For: Retirees seeking safe income and tax benefits.

4. Monthly Income Plans (MIPs)

Monthly Income Plans (MIPs) are mutual funds that invest primarily in debt instruments with a small component towards equities to take advantage of the ‘growth’ potential. These funds are designed to generate a steady stream of income in the form of dividends and preserve the investors capital to some degree.

Returns are market-dependent, but are less volatile than more equity-heavy funds.

For regular income generation, Systematic Withdrawal Plans (SWPs) can be opted by investors in dividend payout options or growth plans.

MIPs are ideal for those looking to earn more than fixed deposit rates but wanting to take low to moderate risk linked to the financial markets.

Key Details:

• Returns: Moderate; based on market performance.
• Risk Level: Low to moderate.
• Taxation: Dividends taxed as per income slab.

Best For: Investors who were willing to take a market risk in order to earn higher returns than traditional savings vehicles.

5. Peer-to-Peer (P2P) Lending

Through P2P lending platforms such as LenDenClub, lenders can earn more than the interest they earn on traditional saving options or FDs by directly connecting with borrowers.

As an investor, you can spread your funds over several borrowers with different credit profiles to optimise risk exposure with returns.

The platform processes borrower screening and repayment tracking, making it an easy option for lenders looking for passive income streams with monthly payouts of principal and interest amounts.

This option, however, is medium-to-high risk, depending on borrower reliability in repayment.

Key Details:

Returns: As much as 12% a year.

Level of Risk: Medium to high.

Best For: Investors looking for better returns and accepting moderate risk

6. Real Estate Investment Trusts (REITs)

REITs enable investors to earn profit from rental income without physical property ownership. These trusts collect money from several investors and invest in cash-generating real estate like office spaces, commercial properties, malls, etc.

These assets generate rental income that is distributed to investors, and there is an upside in capital appreciation as the properties appreciate in value over time.

Real Estate Investment Trusts are mutual funds that invest in real estate, traded on stock exchanges and therefore much more liquid than direct real estate investments. 

They provide a great way to diversify portfolios as well as always having a steady stream of income.

Key Details:

• Returns: Rental income dividends; potential capital appreciation.
• Liquidity: High
• Risk Level: Moderate; subject to market fluctuations

Best For: Investors who want exposure to real estate without the need of owning and managing real property.

7. NCDs (Non-Convertible Debentures)

NCD – Non-Convertible Debentures are fixed-income investment-grade security similar to a bond, but are not convertible into shares. 

These are excellent investment options as they provide higher interest than traditional fixed deposits with periodic payouts (monthly or quarterly).

NCDs are rated by Credit agencies, and investment in AAA-rated debentures ensures lower risk. 

Though they are less liquid than stocks or mutual funds, they serve as an attractive option for people looking for predictable returns over a fixed tenure.

Investors must research deeply on the creditworthiness of the issuer as part of the process to avoid the risks of default or repayment delays.

Key Details:

Returns: Higher than FDs; depends on the issuer’s rating

Tenure: 1–5 years, depending on the issuer.

Risk Level: Moderate; opt for AAA-rated NCDs for safety.

Best For: Those who want higher fixed returns with moderate risk.

8. Annuity Plans

Annuity plans are essentially insurance products that promise to pay you a fixed periodic payout for a regular investment of a lump sum amount. 

Such plans are particularly useful for retirees looking for lifelong income security.

You can either choose from immediate income plans, where payouts start immediately after investing, or deferred income plans, where payouts begin after a certain time period.

Payouts can occur monthly, quarterly, or annually, however you set it up.

Annuities guarantee the retiree’s financial stability, but the squeeze is that the initial investment is inaccessible for life or until the plan matures, so the resources are not liquid.

Key Details:

• Payout Frequency: Monthly, quarterly or annually
• Product Types: Immediate and deferred annuities
• Risk Level: Low; good for retirement planning.

Best For: People in retirement looking for a comfortable guaranteed lifetime income option with lowest risk.

9. Unit Linked Insurance Plans (ULIPs)

ULIPs offer life insurance coverage as well as the ability to invest in equity and debt funds linked to the market.

A part of your premium goes towards insurance coverage and the remaining can be invested in funds of your choice based on your risk appetite and financial goals.

It provides an option to switch from one fund to another during volatile market conditions and tax benefits under Sections 80C and 10(10D).

ULIPs investment do come with a lock-in period of five years, but over that period of time, they have huge potential to grow. Thus, it can be a good tool for wealth creation in the long run along with insurance protection.

Key Details:

• Returns: 8 % to 12 % p.a (Varies based on fund performance)
• Lock-in-period: 5 Years
• Tax Advantage: Under section 80C and section 10(10D)

Best For: For the investors in search of insurance along with wealth creation.

10. Debt Mutual Funds with (SWP) Systematic Withdrawal Plans

Debt mutual funds mostly invest in fixed-income securities, such as bonds and government papers with an objective of generating stable returns with low risk for investors.

Investors can also tap for SWPs which will allow you to withdraw fixed amount at regular durations (monthly or quarterly) from your investments while keeping your principal intact or growing over time.

It is a good strategy for people who need regular cash flow but also do not wish to take timing risk of any equity market segment.

Key Details:

• Returns: Fairly steady; more so than equity funds
• Taxation: Gains taxed based on holding period—short term capital gains or long term capital gains tax
• Risk Level: Low to moderate

Best For: Investors who require periodic withdrawals while wanting to keep their principal investment intact.

11. Dividend Stocks

Dividend stocks are a type of share in the companies that pay regular dividends to the shareholders. These stocks are usually from well known companies with a solid track record of steady earnings and dividends payments.

This not only pays you periodic income, but also profits you if the stock value appreciates over time through investment in such stocks.

However, this is not a guarantee, as dividend payments depend on the company’s financial performance. For this, the selection of the company and the follow-up must be done very carefully to ensure a stable and reliable income.

Key Details:

• Returns: Dependent on company performance and dividend payout
• Risk Level: High; subject to market volatility
• Liquidity: High

Best For: Seasoned investors looking for both steady income and capital appreciation over time.

12. High-Yield Savings Accounts

High-yield savings accounts provide a higher interest rate than one from a normal savings account while still allowing quick access to funds. 

Such accounts are offered by banks or financial institutions and are a great option for anyone who wants to keep their funds liquid while earning a competitive return.

Interest rates are generally higher than inflation as a result your cash grows vigorously over time.

And as such accounts do not have any lock-in period: you can take out anytime without penalties which makes them a safe option for short term financial goals or emergency funds.

Key Details:

• Interest Rates: ~4%–6% per year (depending on the institution).
• Risk Level: Low; the principal is safe.
• Liquidity: High; payment can be withdrawn instantly.

Best For: Investors prioritizing liquidity alongside modest returns.

13. Certificate of Deposit Laddering (CD Laddering)

CD laddering is simply investing into multiple certificates of deposits with staggered maturity dates. Such money investment ensures liquidity at regular intervals while earning better interest rates than in a regular savings account.

Once each CD matures, you can reinvest the principal in a new CD or use it for other purposes based on your financial needs.

This method minimizes interest rate risk and offers a consistent income over time, making it a common choice for risk-averse investors who desire stability with periodic liquidity.

Key Details:

• Interest Rates: 5%–7% per annum (depends upon your bank & tenure).
• Tenure: Typically between 1 year to 5 years
• Risk Level: Low

Best For: Conservative investors who seek predictable returns with occasional liquidity.

14. Public Provident Fund (PPF)

Public Provident Fund (PPF) is a long-term savings scheme backed by the government, which provides returns on investment and tax benefits under Section 80C of the Income Tax Act.

It has a 15-year lock-in period, but allows partial withdrawals after six years for particular needs, such as education or medical emergencies.

This interest rate is adjusted every three months by the government, causing your money to grow consistently over the years.

Key Details:

• Interest Rate: ~7% a year (it might change quarterly).
• Lock-in period: 15 years
• Tax Advantage: As per Section 80C; Returns are tax exempted.

Best For: Conservative investors who want a long-term savings vehicle with an assured return and tax benefits.

15. Short-Term Treasury ETFs (Exchange-Traded Funds)

Short-term Treasury ETFs invest in government securities with short maturity periods and offer stable returns with very low risk exposure. 

These are traded on the stock exchanges which offers a good amount of liquidity for the investors who may need to access their funds in a short notice.

Because they invest in short-term bonds, ETFs are not affected as much by the rise and fall in interest rates compared to long-term bonds, making them low-risk options during times of market volatility.

Investors make money by receiving dividends provided by the ETF, which come from interest earned on underlying securities.

Key Details:

• Returns: Moderate
• Liquidity: Very High
• Risk Level: Low

Best For: Investors who want low-risk and liquid investments that pay better than savings accounts.

Why Choose the Best Investment Plan for Good Monthly Returns?

Whether you are beginning your career as an investor, or preparing for your future, here are the major benefits these investment plans offer:

• Stable Revenue: These plans give a reliable cash flow that may be required to cover expenses.
• Portfolio Diversification: They assist in spreading risk through diversification in your portfolio across various investment types.
• Passive income: It will give you a passive source of cash without having to be very much involved in making money.
• Tax Efficiency: Some monthly investment plans also help in saving taxes thus maximizing your after-tax income.

Factors to Consider When Choosing the Best Monthly Investment Plan

Choosing the right investment plan for monthly income requires a comprehensive analysis of various parameters. It includes:

Risk Tolerance

Your risk tolerance is an important factor when deciding on an investment plan. Some plans, like fixed deposits or government-backed schemes, offer low-risk options with predictable returns, ideal for conservative investors.

Equity mutual funds or P2P lending, on the other hand, may offer greater returns but also carry more risk.

Before choosing any investment plan, assess your comfort level with the potential volatility and losses that may occur in the markets.

Tax Efficiency

Tax can play a huge toll on your after-tax income. 

Certain investment plans, such as Public Provident Fund (PPF) and Senior Citizen Savings Scheme (SCSS), provide tax benefits under Section 80C of the Income Tax Act.

On the other hand, dividend stocks or Real Estate Investment Trusts (REITs) may be taxed on the returns.

So, it is important to plan ahead and understand the tax implications of each investment so that you can maximize your net income at the end of the day without running afoul of tax laws.

Liquidity Needs

Liquidity is all about how easily you can access the money that you invested when you have an emergency or the priorities have changed financially for you.

Fds/POMIS would have penalties for early withdrawal, while mutual funds with SWPs and high-yield savings account have more flexibility.

While regular payouts provide you financial security, liquidity ensures that you do not lock up funds unnecessarily.

Investment Horizon

Deciding between short-term and long-term plans depends on your investment horizon.

For short-term goals, you need liquid, low-risk investments such as high-yield savings and short-term debt funds.

For long-term objectives, you can explore additional investment avenues such as PPF or annuity plans, both of which can offer compounded growth and assurance of a fixed income over the years.

Diversification

Diversification is the golden rule of investing—it lowers risk by allocating capital over different asset classes.

A well-balanced portfolio would contain fixed-income instruments for stability, equity-based investments for growth, as well as alternative avenues such as P2P lending for high returns.

Diversifying makes sure that bad performance in one asset does not significantly affect your total returns.

By carefully evaluating these factors, you can select an investment plan that aligns perfectly with your financial goals and monthly income requirements!

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