When we talk of a regular income from investments, in most cases, this discussion is in the context of retirement planning. The idea is to have a stable and a regular income whether it is supplementing your existing pension or simply to get that pension, if you don’t have one.
It becomes important that the corpus from where this income is coming should also remain safe. Hence, most people gravitate towards FDs in banks or other government-backed schemes like the Senior Citizens Savings Scheme (SCSS), Post Office Monthly Income Schemes (PO MIS) or even Pradhan Mantri Vyaya Vandana Yojana (PMVVY).
The merits and demerits of these schemes deserve a dedicated discussion by itself. What we want to highlight today is that these might not be the best option for you to get a regular and stable income when we take into account some realistic variables.
Most of these schemes need you to lock-in your corpus for at least a few years, while they pay the returns from time to time, as per THEIR TIMELINE. What if you suddenly need a large part of the corpus for some reason? Well, there are provisions to get that, but with layers of complications.
Another very important factor to consider is taxation. Some of these schemes, not all, do allow you a tax benefit at the time of investments under Section 80C of the Income Tax Act. But the income from these investments is fully taxed as per your tax slab.
What if you could reduce your tax by at least 15 times!!
What? 15 Times – you may ask incredulously.
If you want this, look at the Systematic Withdrawal Plans (SWP) from mutual funds.