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.
Liquidity
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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Suresh
Myinvestmentideas.com
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Dear Suresh,
if I have a corpus of 70 lakhs as my life savings & I need a monthly income from it to live my life with family, what would be the safest yet best instrument(s) to park my money in? kindly give me a detailed guide as to how should I go abt it.
thanks a lot for your valuable advise.
Nishanth
Hi Nishant, It depends on your risk appetite. IF you do not want to take risk, just invest in bank FD or POMIS scheme which can fetch you 7% to 7.5% returns per annum. If you can take some risk, invest in debt mutual funds which can give you 8% to 10% annualised returns.
Thanks for ur reply. But i need a monthly payment. Will the FD give inflation adjusted returns.
I am retired aged 58 years from pvt company pl suggest some good MIP which higher returns
I am looking for regular monthly income without any tax liability on all earnings and the best so far that I have found is HDFC Prudence Fund. It has paid a monthly dividend of 30p per unit and unit NAV is Rs.33.30 as of today. Is there any better fund available – but the condition is that I must get monthly income for the next 5 years.
good . I too am in it. relax .
Balanced Fund – monthly dividend payout one time investment tax free
kindly tell me where I should invest my money for next 5-10 years to get an MIP.