Many people want a regular monthly income from their savings. Some are retired. Some want passive income. Some want financial freedom. Whatever your goal is, choosing the best investment plan for monthly income is very important.
But here is the truth — there is no single “best” option for everyone. The right plan depends on:
- Your age
- Your risk capacity
- Your total investment amount
- Your monthly income requirement
- Your tax situation
In this detailed guide, I will explain everything in very simple language with proper examples and calculations so you can understand clearly.
Let’s begin.
What Is a Monthly Income Investment Plan?
A monthly income investment plan is an investment where you receive regular payouts every month.
The income can come from:
- Interest
- Dividends
- Rental income
- Systematic withdrawal
The goal is simple:
👉 Your money should generate money every month.
Important Formula You Must Know
Before choosing any plan, understand this simple formula:
Monthly Income=(Investment Amount×Annual Interest Rate)÷12
For example:
If you invest ₹10,00,000 at 7% annual return:
₹10,00,000 × 7% = ₹70,000 per year
₹70,000 ÷ 12 = ₹5,833 per month
So you earn approximately ₹5,800 per month.
Simple, right?
Now let’s explore the best options in India.
Best Investment Plan for Monthly Income in India
1. Bank Fixed Deposit (FD) – Safe and Simple
A Fixed Deposit (FD) is one of the safest investment options. Banks offer a fixed interest rate for a fixed period.
How It Works
- You deposit a lump sum.
- You choose monthly interest payout.
- You receive interest every month.
Example
If FD interest rate is 7%:
Investment: ₹20,00,000
Annual interest: ₹20,00,000 × 7% = ₹1,40,000
Monthly income: ₹1,40,000 ÷ 12 = ₹11,666
So you get around ₹11,600 per month.
Advantages
✔ Safe
✔ Fixed returns
✔ Easy to understand
Disadvantages
✖ Fully taxable
✖ Returns may not beat inflation
FD is good for conservative investors.
2. Post Office Monthly Income Scheme (POMIS)
This is a government-backed scheme that pays monthly interest.
Features
- Government security
- Fixed interest
- 5-year lock-in
Example
If interest rate is 7.4%:
Investment: ₹9,00,000
Annual income: ₹9,00,000 × 7.4% = ₹66,600
Monthly income: ₹66,600 ÷ 12 = ₹5,550
Safe and predictable income.
3. Senior Citizen Savings Scheme (SCSS)
Best option for people above 60 years.
Why It’s Good
- Higher interest than FD
- Government backed
- Regular income
Example
Interest rate: 8.2%
Investment: ₹30,00,000
Annual income: ₹30,00,000 × 8.2% = ₹2,46,000
Quarterly payout: ₹61,500
Monthly equivalent: ₹20,500 approx.
This is one of the best safe income options for retirees.
4. Monthly Income Plans (MIPs) in Mutual Funds
MIPs invest mostly in debt and some in equity. They do not guarantee returns but aim to provide stable income.
Instead of fixed interest, you use a Systematic Withdrawal Plan (SWP).
What Is SWP?
You invest a lump sum and withdraw a fixed amount every month.
Example: ₹50 Lakhs in Mutual Fund SWP
Assume average return: 8% per year.
₹50,00,000 × 8% = ₹4,00,000 yearly return
Monthly possible withdrawal:
₹4,00,000 ÷ 12 = ₹33,333
So you can withdraw ₹30,000–₹33,000 monthly without disturbing principal (if returns remain stable).
Advantage
✔ Better than FD returns
✔ Tax efficient (capital gains tax)
Risk
✖ Market fluctuations
Best for moderate risk investors.
5. Corporate Fixed Deposits
Companies and NBFCs offer higher interest than banks.
Interest rates: 8–9%
Example
Investment: ₹15,00,000
Interest rate: 8.5%
Annual income: ₹15,00,000 × 8.5% = ₹1,27,500
Monthly income: ₹10,625
Higher returns but slightly higher risk than bank FD.
Always check credit rating before investing.
6. Dividend Paying Stocks
Some companies regularly pay dividends.
Example:
If a stock gives 5% dividend yield:
Investment: ₹10,00,000
Annual dividend: ₹50,000
Monthly average: ₹4,166
But dividend is not fixed. It depends on company profit.
Suitable only for experienced investors.
7. Real Estate for Rental Income
You can buy property and earn rent.
Example:
Property value: ₹50,00,000
Monthly rent: ₹20,000
Annual income: ₹2,40,000
Rental yield: 4.8%
But property needs maintenance and is not very liquid.
Comparison Table
| Investment Option | Return % | Risk Level | Monthly Income Stability |
| Bank FD | 6–7.5% | Very Low | High |
| POMIS | ~7.4% | Very Low | High |
| SCSS | ~8%+ | Very Low | High |
| Mutual Fund SWP | 7–10% | Moderate | Medium |
| Corporate FD | 8–9% | Medium | High |
| Dividend Stocks | 4–6% | High | Low-Medium |
| Rental Property | 3–5% | Medium | Medium |
How Much Should You Invest for ₹25,000 Monthly Income?
Let’s calculate.
Assume average return = 7%
Annual income needed = ₹25,000 × 12 = ₹3,00,000
Required investment:
₹3,00,000 ÷ 7% = ₹42,85,714 approx.
So you need around ₹43 lakhs at 7% return.
If return is 8%:
₹3,00,000 ÷ 8% = ₹37,50,000
Higher return = Lower required capital.
Smart Strategy: Mix Investments
Instead of putting ₹50 lakhs in one option, divide like this:
- ₹15L in FD
- ₹10L in SCSS
- ₹15L in Mutual Fund SWP
- ₹10L in Corporate FD
This creates balance of:
✔ Safety
✔ Growth
✔ Better income
✔ Risk management
Diversification reduces risk.
Tax Planning Matters
Interest from:
- FD
- SCSS
- POMIS
- Corporate FD
is fully taxable.
Mutual fund SWP is taxed as capital gains.
Always calculate post-tax income, not just interest rate.
Inflation Warning
If inflation is 6% and your return is 6%, your real growth is zero.
So try to combine:
- Safe income options
- Moderate growth options
This protects purchasing power.
Example: Complete Plan for ₹50 Lakhs
Let’s build a balanced monthly income plan.
Allocation
₹20L in FD @ 7%
₹15L in SCSS @ 8.2%
₹15L in SWP @ 8%
Income Calculation
FD: ₹20L × 7% = ₹1,40,000
SCSS: ₹15L × 8.2% = ₹1,23,000
SWP: ₹15L × 8% = ₹1,20,000
Total Annual Income = ₹3,83,000
Monthly Income = ₹31,916 approx.
Plus, part of SWP investment may grow over time.
This is a practical and balanced approach.
Who Should Choose Which Option?
Retired Senior Citizen
✔ SCSS
✔ FD
✔ POMIS
Middle Age Professional
✔ FD
✔ SWP
✔ Corporate FD
Young Investor Wanting Passive Income
✔ Mutual Funds
✔ Dividend Stocks
✔ REITs
Common Mistakes to Avoid
❌ Investing all money in one scheme
❌ Ignoring tax
❌ Chasing very high returns
❌ Not keeping emergency fund
❌ Ignoring inflation
Final Advice
The best investment plan for monthly income is not about the highest return.
It is about:
✔ Safety of capital
✔ Regular income
✔ Inflation protection
✔ Tax efficiency
✔ Diversification
If you want guaranteed income, choose safe government-backed schemes.
If you want slightly higher income and growth, mix FD and mutual funds.
If you want maximum growth with risk, consider equity income options.
Always calculate:
- Expected monthly income
- Post-tax income
- Inflation-adjusted return
Money management is not about excitement. It is about stability and planning.
Also Read: Star Health Insurance Plans – Benefits, Examples, and Cost Calculations
Conclusion
Choosing the best investment plan for monthly income in India requires careful thinking and smart planning. Fixed deposits and government schemes offer safety and stability. Mutual funds and corporate deposits offer better returns with moderate risk. Real estate and dividend stocks can add extra income but require experience.
The smartest strategy is to diversify your investments and create a balanced income system. With proper calculations and planning, your savings can provide you steady monthly income and financial peace of mind.