Post Office Monthly Income Scheme (MIS) -Who should invest?

Post Office Monthly Income Schem (POMIS)-Who should investPost Office Monthly Income Scheme (MIS)-Who should invest?


One of the safest investment options is investing in post office saving schemes. Among the various investment offerings from the Post office, Monthly Income Scheme (MIS) is a unique scheme which provides regular monthly income. There are several good things about Post Office Monthly Income Scheme (MIS). What are the features of Post Office MIS Scheme? Who should invest in such Monthly income Schemes (MIS) of Post office?

 

Features of Post Office Monthly Income Scheme (MIS)


  • Post office MIS Scheme provides guaranteed regular monthly income.
  • The rate of interest is 8.4% per annum. E.g.  if you invest Rs 3 Lakhs, you would get Rs 2,100 per month.
  • Maturity period is 5 years.
  • Minimum investment is Rs 1,500 and multiples of Rs 1,500 each.
  • The maximum investment limit is Rs 4.5 Lakhs.
  • You can open any number of MIS schemes. However the overall maximum limit unchanged.
  • You can also open this scheme as joint holder. The investment limit for the joint MIS scheme is Rs 9 Lakhs.
  • You can open SB account with same post office so that interest is credited to such SB account.
  • Nomination facility available when opening the account or at a later point of time.
  • PO MIS Scheme can be transferred to any post office across in India free of cost.
  • Guarding / Parent can open PO MIS scheme on behalf of a minor who has completed 10 years of age. Upon majority, minor need to convert such account in his name.

Also Read: Current interest rates in Post office saving schemes in India

What are the positive factors of Post office MIS Scheme?


  • Risk free monthly income as Post Office is owned by Govt. of India.
  • Regular monthly income @ 8.4% per annum interest rate. Rs 1 Lakh invested would earn Rs 700 per month.
  • No TDS is deducted by Post office. However, in case the interest amount is taxable, tax payer needs to declare this in his / her income tax returns and pay necessary income tax based on his income tax slab.
  • Good for Sr. Citizens, retired individuals and individuals who do not want to invest in equity or mutual funds or bank FD schemes.
  • The deposit amount is exempted from wealth tax.

What are the negative factors of Post office MIS Scheme?


  • Low returns compared to bank FD schemes which offer 9% returns.
  • Non Resident Indians cannot apply for this PO MIS Scheme
  • If you do not open SB account with the post office and do not withdraw interest on time, such interest would not earn any interest.
  • Interest in the such PO MIS scheme cannot be transferred to the bank SB account.
  • No tax rebate u/s 80C though this is 5 year deposit.

Are there any penalties for premature withdrawal of PO MIS Scheme?


  • You cannot withdraw the PO MIS scheme within 1 year
  • 1-3 years – 2% of penalty on deposit amount
  • >3 years – 1% of penalty on deposit amount

Also Read: How to invest your retirement money in India?

How to maximize returns from Post Office MIS Scheme?


Keeping some limiting points into consideration, I can suggest below strategy to maximize returns from MIS scheme.

  • Open a SB account with the Post Office and put a request to transfer, PO MIS scheme interest to be credited to such SB account. You can expect some returns from SB account in case you are not withdrawing it immediately after the interest is credited. You can also transfer such money to any other bank account.
  • In case you do not need this money on a monthly basis, you can re-invest by opening a recurring deposit with the same Post Office and giving auto instructions to debit your Post office SB account. This way, PO MIS scheme interest credited in SB account would get re-deposited under recurring deposit. Currently recurring deposit rate in Post Office carries a 8.4 % interest per annum.

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Suresh
Post Office Monthly Income Scheme (MIS)

Suresh KP

38 comments

  • Kishor rokadiya

    Excellent advise

  • vikas katna

    Is MIS is taxable if we opened a account in the name of my family members.

  • Kunal Batish

    Hi Suresh,

    Greetings,

    i am 25 year old, single and presently working in private automobile firm with an annual salary of 2.5 lakh(revised yearly). Till the time, my total savings are 3 lakh. i want to take this amount to 25-30 lakh when i become to 30 year old. So, can you please suggest me any investing ideas.

    Regards,
    Kunal Batish

    • Kunal, How much you can invest every month ? Based on this, I can suggest options.

      • Kunal Batish

        Thanks for your revert back.
        on the monthly basis, my savings are Rs 15000 approx cash and RS 2500 at the name of my P.F.

        • Accmulating 25-30 L in 5 years would be difficult with your current savings. You can invest in mutual funds, but you need to look for atleast 8-10 years as you may not get bull runs every year. Invest in these funds. 1) Large cap – HDFC Top-200 / ICICI Pru focussed blue chip fund 2) Mid-cap – HDFC Mid-cap opps fund / Franklin India smaller co’s / SBI Midcap fund 3) Balanced – You can check HDFC Prudence / ICICI Balanced fund. 

  • Taran

    I am 36 years old and a father of 2 daughters. I have put in 12L in FD and been investing regularly in PPF since last 3 years. Now with every month, I want to start investing regularly to build high corpus by the time I am 45 so as I can retire early. I am planning to put 1L per month in possibly different products to yield good returns. Can you please suggest how should I put in my money smartly and its % allocations into what all products.

    I am also planning to do Term insurance and Health insurance (additional) in a month or two.

    Thanks.

    • Taran, First take term insurance. Good to hear that you are already investing in PPF. If you are in high tax bracket, continue to invest in PPF and increase the money. Best way to create wealth is invest in mutual funds in large cap segemnt and mid cap segment. Apart from this invest in secured NCD’s offering 12% to 13% interest rates. These keep coming to market now and then. Limit this to 10%.

      • Taran

        Thanks Suresh for your comments. Could you please elaborate on

        a) How should (what ratio) I split my monthly 1L into RD; Mutual Fund; Gold; etc
        b) Which Mutual Fund should I invest in for 3 months; 1 year and 3 years
        c) Are NCD’s risk free and taxable?
        d) Which term insurance do you recommend? I heard about whole life policy as well.
        e) Which Health insurance do you suggest for me? I do have 4L floater from my company.

        I am in 30% tax bracket so need to put in investments judiciously.

  • sudhina

    hey hi Suresh,

    I have not invested anywhere but i really wish to do invest where i can get a good money returns basically to close the loans and then can focus on having a house of own.

    Right now i have 7lakhs loan to be closed.I was working with HP and now that i have quit i would get somehwere close to 2.5 lk i would like ur advice to know where do i  invest  this money to double the money in a year or 2 to balance the life.

    Thanks for your time.

    Regards,

    Sudhina

    • It is highly impossible to double your money in 1-2 years. If you can take some risk, you can invest in secured NCD’s which keep coming. Alternatively you can invest in sector funds like reliance banking fund, HDFC infra fund for 4-6 months SIP every month and you can get good returns in 2-3 years. However this carries risk. 

    • sudhina

      hey suresh,thanks for your prompt response .

      What would u do if u had 2lkahs or more where do you think you would have invested.

      Do you know about chit funds is it the right place to put ur money.If i put around 5 k in MIS post office what would be the returns.

       

      Regards,

      sudhina

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