Monthly Income Plan (MIP) in Mutual funds
Monthly income plans (MIP) in mutual funds are alternatives to fixed deposits and post office Monthly income scheme (MIS). These mutual funds provide monthly income by way of dividends based on the performance of the mutual fund. Hence identifying best dividend mutual funds is key for the success of this investment option.
About Monthly Income Plan (MIP) in mutual funds
These are dividend mutual funds which invest largely in bank fixed deposits, bonds, NCD’s, Govt securities etc which provides fixed income. A portfolio mix of 0% to 30% would be invested in equity market thereby getting exposure to stock market. However unlike Bank Fixed deposit or Post office MIS, these MIP mutual funds does not guarantee a fixed return on investment per month. The returns would vary based on the stock market fluctuations and fund’s performance.
Types of Monthly Income Plan (MIP) in mutual funds
There are two types of MIP’s in mutual funds.
- Aggressive MIP Mutual fund: They invest 15% to 30% of the fund amount in equity markets.
- Conservative MIP Mutual fund: They invests from 0% to 15% of the fund amount in equity markets
To whom these MIP’s suit best
These dividend mutual funds suits best who are new to investing and want to take small exposure to equity markets and maximize the returns for their investment. However the returns on MIP’s would attract dividend distribution tax (approx 14% on returns). Investor should look them as a long term investments which provides opportunity for maximizing the returns.
Since these are like any other mutual funds, an investor can liquidate by paying the exit load (most of the MIP’s charge 1% exit load) on mutual fund investment.
Top 8 Monthly Income Plan (MIP) mutual funds in India
There are several mutual funds in India and the best and top dividend mutual fund schemes are enclosed below.
Conclusion Remarks: These MIP dividend mutual funds provide higher returns comparing to bank fixed deposits (which ranges between 8% to 9.5%) and post office MIS scheme (which provides 8.5% returns). However look these MIP’s as long term investments of 3 to 5 years so that the returns are maximized.
Readers, what is your opinion on these MIP best dividend mutual funds? Do you see there are any other better monthly income plans which provide higher returns?
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