Funds that gives Monthly Income Plans (MIP) | Comparison MIP with other schemes

In general, some of the investors wish to take the monthly income on their invested amount.  For such a type of investment, there is excellent Monthly Income Plans (MIP).  These plans will give some part of the invested money as a monthly income form like pension for a one-time investment.  Currently there are lots many MIPS that are available in the market that depends on the Risk factor of the Investor.

Even though there are many Mutual funds like Equity, Debt and Balanced that are available in the market the customers showing special interest to invest their amount in the attractive fund that is giving more income called MIP.   With the single plan, one will get the monthly income by investing their money in Debt as well as equity.  In this plan, more percentage of investment is allocated to Debt plan and fewer amounts are allocated in Equity market.  With the less percentage of investment in Equity plan one has a possibility to increase their capital.   In general around 5 – 30 percent of the MIP funds are invested in equity market.  This allocation of percentage differs between fund to fund.  The final amount that is earned with this investment depends on the period that is selected.  The investors can choose the options to earn the income from this investment on monthly basis, once in every three months or six months or once in a year.   If the investments do not want to earn the income every month then he can go for the Growth investment where the profit on the investment depends on the increase in the unit value.

Comparison MIP with other schemes

The working of Mutual fund MIP is very different with the working of Bank Fixed Deposits and Post office MIS.  The post office MIS scheme will gives the fixed monthly income every month but there is no guarantee that the Mutual fund MIP will gives this much of amount.  There is no guarantee on the  income which is incurred from the Mutual fund MIP scheme due to the part of its amount is invested in Equity.  One can gain more Monthly income from Mutual fund MIP while comparing the income with the normal MIPs when the equity market is increasing.  There is certain restriction on the investment, which is to be investing in the Post offices.  However, there is no restriction on the amount that is investing in the Mutual Fund MIPs.  There is no exit load on the Fund MIPs after the completion of a year.

Better in terms of Income Tax

Coming to the Income Tax, which has to be paid on the profit on the investment one can say that Mutual fund MIPs are more attractive when compared to others.  In the general MIS schemes every paisa that is coming, as a profit on investment will be considered as an income.  The rate of the income tax is depends on the customers personal income slabs.  The tenure is important in the case of Mutual fund MIPs.  If the customer withdrawn the investment with in a year then that amount will be considered as a personal income to the customer.  If the withdrawn from the scheme after a year then the Long term Capital gain tax is applicable on the amount.  If the indexation is not there then the tax percentage is 10.3 on the investment.  If the indexation is there then it will be 20.6 percent of tax on the amount.  The customers who are chosen the dividend option will get the tax-free dividend to their hands.

Risks to be Remembered

The Mutual fund MIPs will not give the income as one can earn the fixed income on the investment in General MIS.  One can easily say that General MIP’s contains Liquidity, which provides some security and more profits by allocating the investment to Debt and Equity.  However, there is no guarantee in these profits.  When the equities are falling in losses then it gives lesser income then the Fixed Deposits.   During these situations one can expect any profit on the amount that is invested.