Whenever you think about planning for your retirement, you must have thought about how to build a regular stream of income in the absence of a salary. Well, investment plans with monthly returns can be the answer to your query.
An annuity plan pays you a fixed monthly pension for life against a lump-sum premium payment when purchasing the plan. Such plans further invest your money and pay you the pension from those investments. The pension payout can be monthly, quarterly, half-yearly, or annually as per the buyer’s choice.
Annuity plans can be taken for both single life and joint life.
An annuity plan can be of two types.
- Deferred Annuity
In deferred annuity plans, the annuitant pays a lump-sum premium at the beginning of the plan and selects a deferment period that can be anywhere between one to ten years. The annuity rates are also guaranteed at the inception of the policy.
The annuitant starts receiving a fixed pension once the deferment period is over. The annuitant can also increase the annuity amount by buying top-up plans in future.
- Immediate Annuity
Immediate annuity plans start paying out annuity immediately after the individual purchases the plan. However, the pension amount can be lower than that offered in a deferred annuity plan, as your money doesn’t get the opportunity to accumulate interest during the deferment period.
Furthermore, immediate annuity plans cannot be surrendered, unlike deferred annuity plans.
Bank Fixed Deposits
Traditional fixed deposits in banks have an option of monthly interest payout where the interest on the deposited amount is credited to the depositor’s account on a monthly basis.
Post Office MIS
The traditional MIS (Monthly Income Scheme) of the Post Office is one of the oldest monthly return schemes in India, where the investor deposits a lump sum amount in the scheme for a fixed tenure and keeps getting fixed monthly returns on that investment. The investment amount is returned after the tenure of investment is over.
ULIP with Systematic Withdrawal Plans
ULIPs (Unit Linked Insurance Plans) are market-linked products suitable for individuals willing to take risks to increase their chances of getting higher returns.
In ULIPs, a part of the premium amount collected from the policyholder is invested in equities to generate wealth and debt instruments to generate guaranteed returns. However, the policyholder can reduce his/her risk exposure by reducing the percentage of equities and increasing the share of the debt.
Policyholders can choose the option of systematic withdrawal in ULIPs, where they can withdraw a fixed amount in regular intervals to create a monthly income.
You can choose to go for a combination of two or more different investment plans mentioned above. For instance, you can invest a part of your corpus in any of the HDFC bank saving investment plans and the remaining part in a traditional bank fixed deposit to ensure receiving monthly income from different sources after retirement.