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

38 comments

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.

If you like this article, please share this on your Facebook or Twitter. This would be a special gift which you would be giving to our blog.

Suresh
Post Office Monthly Income Scheme (MIS)

Suresh KP
Latest posts by Suresh KP (see all)

Related Posts:

Tagged with , , , ,

38 comments

  2. I would like to know whether monthly if I deposit rs.5000 in rd for 5 yrs is taxable on maturity

    Reply

  7. Sir i get retire from the army and now i get 35 lakh so tell me how i can increase my money. Should i Investment in property or should i MIS in Post Office so how much i can get if i want monthly income scheme ?

    Reply

  8. a person has illegally opened 3 single MIS accounts each with rs. 4.5 lacs in different post office. what legal actions can be taken against him? where can we file a complaint against him?

    Reply

    1. You can complain the same post office where he opened it. Alternatively in post office main branch in the city. Since this is post office scheme, there is no central place where you can complain

      Reply

  9. Sir I have a 5 lakh . I want to invest in govt scheme. I want to higher monthly interest . pls give me succectiom

    Reply

  10. hi suresh i was some wat confues weather to invest my 2lakhs in post office fixed deposits or in public sector bank fixed deposits sggest me wich ever is better so that i can re invest my intrest amount in to a non taxable investment

    Reply

    1. It is immaterial wehther Post office does not deduct TDS and banks deduct TDS, any how you need to pay tax. Post office offers higher interest rates now compared to banks. You can check highest rates and deposit. 

      Reply

  13. 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

    Reply

      1. 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.

        Reply

        1. 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. 

          Reply

  14. 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.

    Reply

    1. 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%.

      Reply

      1. 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.

        Reply

  15. 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

    Reply

    1. 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. 

      Reply

    2. 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

      Reply

  17. Hi Suresh,

    Thanks for such a wonderful guidance and I follow your blog regularly.

    I would be lucky if you could guide me as well. I am 31, married and I have a daughter.

    I have 3 goals from here i.e. saving enough money for my childs education, her marriage and our retirement. I earn a salary of 7 lacs and I am already under a home loan. I am able to set aside 20000 per month for savings after all expenses paid. Below are my savings till date:-

    NSC 200000
    PPF 100000
    FD 400000
    UTI ULIP 60000
    IDFC Premier SIP started this year for 2000 per month (invested total 10000 and current value 11100).

    Can you guide me sufficiently so I can achieve my 3 goals.

    Thanks
    Pranay S

    Reply

    1. Pranay, good to hear about you. Surprised that you are 31, but invested in only zero risk investment options. Also you invested in ULIP 1) Since you are earning 7L per annum, you can consider taking Rs 70L to Rs 1 Crore term insurance. You may need to pay less than Rs 12,000 if you take online term insurance per annum 2) Review and close UTI ULIP. You cannot get more than 6% returns on such ULIP’s. You can invest them in just a simple FD which you can get 9% pre tax returns 3) With your Rs 20K per month invest in atleast 5 to 7 funds in large cap, mid-cap and balanced funds. Some of the reco’s could be 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. 

      Reply

      2. Hi Suresh,

        One more question, hope you can help me!

        How can I identify how much money I will approximately need at the end of my service to meet all the goals. I read your article about the “Thumb rule of 72” and it explains how much time will it take at the existing rate of interest to double my money. However considering the existing rate of inflation how can I identify the money required for my 2.8 years old daughter for her education 16-18 years from now, the money I need to set aside for her marriage and the sum amount required for our retirement and the medical expenses during our old age.

        My parents are reluctant about me investing my money outside traditional ways i.e. NSC, ULIP, FD and LIC are the only ways they choose to prefer for safeguarding the money and considering the volatile nature of markets.

        I have choosen the below SIP’s as per your recommendations, please confirm if this is sufficient to meet my goals:

        HDFC Top 200: Rs. 2000 per month SIP
        Franklin India smaller Opp. Funds: Rs. 2000 per month SIP
        ICICI Balanced Fund: Rs. 2000 per month SIP
        IDFC Premier Growth: Rs. 2000 per month SIP (already in place)
        ICICI Prudential Focussed BlueChip Fund: Rs. 2000 per month SIP
        Recurring Deposit: Rs. 5000 per month.

        My job provides a medical cover of 3 lacs for me, spouse and daughter and also my wife who works in office has the same beneifit which covers us again for 3 lacs but during a medical need only either of us can claim the amount. Do you believe that we should still go for a family floater plan. Please also let me know the best disability and term insurance.

        Your guidance is precious to make a big difference in our lives. Thanks and god bless!

        Regards,
        Pranay P

        Reply

        1. Pranay, You should first identify what are your financial goals. You should know what is today’s cost and what would be estimated future cost. Estimated future cost could be drawn from inflation of approx 5% to 7% per annum. e.g. Rs 5 L education cost today could be Rs 5.75L to Rs 6L after 3 years. Once you know what is your future goals value, you should plan to do savings and grow your money to meet your objectives. e.g. If your daughter is 3 years now and after 12 years you may estimate Rs 10L education cost, considering 12% annualised returns in mutual funds, you should be able to invest Rs 3,100 per month for 12 years to get Rs 10L. This way you should plan and start investing today. you may not have savings today, but start now. You may add every year based on your salary increment / increase in business income. This way you would be able to easily reach your goals.

          Reply

          1. Hi Suresh,

            Thanks for your help!

            I have now intiated 5 new SIP’s as per your guidance and I am looking into insurance coverage now.

            You mentioned earlier that I should go for Term insurance of 50-70 lacs coverage and it would cost me less than 12000 per year.

            The HDFC service is non-responsive and I fear what will be their response when the actual need arises for their service in case of death. The review too on websites for HDFC Click2Protect is not good. I will prefer LIC’s term insurance but the breakup given to me for a 50 lacs coverage is way to high than you mentioned.

            My agent has sent me LIC’s Amulya Jevan -II Plan (Plan No. 823) breakup which comes to 17641 for a coverage of 50 lacs and total premium payable is 617435 till 2049. Can I go ahead with it or can you suggest me anything better from LIC for term insurance coverage of 50-70 lacs please with accidental coverage.

            Thanks!
            Pranay P

          2. Pranay, Even I had similar experience with HDFC Life insurance, hence I shifted to ICICI Pru Term insurance. LIC Amulya Jeevan is also good. You can go for it. You can also try LIC e-term online policy.

Leave a Reply

Your email address will not be published. Required fields are marked *