Are you thinking of investing 1 crore to generate a steady monthly income?
There are several investment options available that can help you generate regular monthly income from a 1 crore investment. However, you must carefully evaluate each option, considering factors such as risk, return potential, and investment horizon, before making any investment decisions.
How Much Monthly Income Can You Earn From a 1 Crore Investment
Your monthly income on your 1 Crore investment portfolio depends on the investment option, interest rate, and return value.
For example, If you invest in low-risk options like fixed deposits, government bonds, or post office monthly income schemes, you can expect to earn an annual return of 7% to 8%. However, investing in stocks or mutual funds can yield higher returns, but it also involves a higher level of risk.
Let’s explore the average monthly returns of ten investment options that can be used to generate a regular income.
Investment Option | Risk Class | Expected Return | Monthly Income |
Fixed Deposit | Low | 7% | 58400 |
Government Bonds | Low | 8% | 66667 |
POMS | Low | 7.4% | 61667 |
SCSS | Low | 8.2% | 68333 |
Corporate bond | Moderate | 10% | 83333 |
Property Rent | Moderate | 4% | 33333 |
MIP Mutual funds | Moderate | 9% | 75000 |
Mutual Fund SWP | High | 12% | 100000 |
Dividend Stocks | High | 10% | 83333 |
Options Trading | High | 5% monthly | 1,00,000 (on 20 lakh) |
Factors to Consider for Monthly Income on Rs. 1 Crore Investment Portfolio
#1. Risk Appetite
You must know your risk appetite before choosing the investment option. If you are willing to take a higher risk, then you can opt for mutual funds or stocks that offer higher returns. If you have a low-risk appetite, you can choose fixed deposits or post office schemes.
You can also diversify your investment portfolio with small amount of 15 lakhs to earn monthly income with low risk and high risk investment plans.
#2. Financial Goals
Your financial goals play a crucial role in choosing the investment option. If you want to generate regular income, you can opt for monthly income plans. If you want to create long-term wealth, you can choose mutual funds or stocks.
If you want to generate a higher income let’s say Rs 100000, then you need to invest in a higher return investment option that gives a minimum of 12% annual return on your 1 crore investment.
#3. Purpose
Do you want to invest 1 crore for retirement planning or do you want to invest for a passive source of income?
For retirement purposes, you might not have other sources of income and you would be completely dependent on the monthly return on your investment. In that case, you would invest in relatively safe investment options.
For passive income, you might have active sources of income and the purpose of investment is wealth creation. In that case, you can diversify your portfolio with stocks and mutual funds and target annual returns in place of monthly income.
#4. Tenure
The investment tenure is the duration for which you are willing to invest your money. The longer the tenure, the higher the return potential. If you have a short-term investment goal, you can opt for fixed deposits or post office schemes. If you have a long-term investment goal, you can choose mutual funds or stocks.
You may like to read how to earn 1000 daily online with zero investment in India.
#5. Tax Implications
Different investment options have different tax implications. You can diversify your investment portfolio based on the tax implications as well.
Investment option | Deduction | Tax Slab |
Fixed Deposit | No | As per your income slab |
Government Bonds | No | Tax-free bonds is fully exempt Others taxed per your income slab |
POMS | No | As per your income slab |
SCSS | No | As per your income slab |
Corporate bond | No | As per your income slab |
Property Rent | 30% standard deduction | As per your income slab |
MIP Mutual funds | No | As per your income slab |
Mutual Fund SWP | STCG – no LTCG – upto 1 lakh | STCG – 15% LTCG – 10% |
Dividend Stocks | No | As per your income slab |
Options Trading | Brokerage & other charges | 15% |
STCG on mutual funds SWP – If you hold mutual funds units for less than 1 year
LTCG on mutual funds SWP – If you hold mutual funds for more than 1 year. Capital gains up to Rs 1 lakh is exempted, and 10% is applicable on above Rs 1 lakh.
How to Diversify 1 Crore Investment Portfolio for Monthly Income
You can diversify your investment portfolio based on age, your risk appetite, and financial goals.
Some of the most common investment diversification models are
A. 60/40 Model: The 60/40 model is a conservative model that involves investing 60% of your portfolio in stocks and 40% in bonds. This model is suitable for investors who want to balance risk and return and have a moderate to low-risk tolerance.
If you are a salaried person, you may like to read how much salary should you invest for better monthly income return.
B. 70/30 Model: The 70/30 model is a moderately conservative model that involves investing 70% of your portfolio in stocks and 30% in bonds. This model is suitable for investors who want to achieve higher returns while still maintaining some level of risk management.
C. 80/20 Model: The 80/20 model is a moderately aggressive model that involves investing 80% of your portfolio in stocks and 20% in bonds. This model is suitable for investors who have a higher risk tolerance and want to achieve higher returns.
You can create your own model depending on your own investment goals. If you have time and interest in options trading then you can invest a maximum of 20% of your portfolio in options trading.
You can also invest in US stocks from India to diversify your portfolio in the global market. The US stock investments apps like INDmoney, Vested or Groww.
Best Investment Options to Invest 1 Crore for Monthly Income
#1. Fixed Deposits
Fixed deposits are a low-risk investment option that can provide you with a regular monthly income.
You can choose a monthly payout option to use fixed deposits to generate a monthly income. You get an interest payout on a monthly basis that you can use to cover your monthly expenses.
The interest rate for fixed deposits varies based on the bank, the deposit amount, and the tenure.
Expected return – 7%
You can expect your money to double in 10-12 years through FD. You may like to read best investment schemes to double your money in India
Average Monthly Income – Rs 58400
- Fixed returns
- Low risk
- Guaranteed principal amount
- Easily accessible
- Low returns compared to other investment options
- Interest income is taxable
- Inflation can erode the real returns
#2. Government Bonds
Government bonds are a form of debt instrument, much like corporate bonds, that are issued by the central or state government under the supervision of the Reserve Bank of India.
As compared to corporate bonds, government bonds are considered to be safer investments. The tenure of government bonds can range from 5 to 40 years, with interest payouts being made every six months.
Types of Government Bonds
- Fixed-rate bonds
- Sovereign gold bonds
- Inflation-indexed bonds
- PSU Bonds
- Zero-Coupon Bonds
You should invest in government bonds that provide a minimum of 8% return.
Expected return – 8%
Average Monthly Income – Rs 66667
- Fixed returns
- Low risk
- Government-backed security
- Interest income is tax-exempt in some bonds
- Low returns compared to other investment options
- Liquidity can be an issue
- Inflation can erode the real returns
#3. Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme (POMIS) is a savings scheme backed by the government that offers a fixed monthly income. You can deposit a lump sum amount and receive a fixed interest rate in return. The scheme has a tenure of five years, with the interest rate being revised every quarter.
Expected return – 7.4%
Average Monthly Income – Rs 61667
- Fixed returns
- Low risk
- Guaranteed monthly income
- Government-backed security
- Low returns compared to other investment options
- Maturity period of five years
- Interest income is taxable
You may like to read how to invest 25 lakhs for regular monthly income in India.
#4. Senior Citizen Saving Scheme
The Senior Citizen Saving Scheme (SCSS) is a savings scheme backed by the government that offers a consistent monthly income stream for senior citizens. You invest a lump sum amount and receive a fixed interest rate every quarter.
You need to be 60 years old or above and you can deposit a maximum amount of 30 lakh in SCSS. The maturity period of SCSS is 5 years, which can be extended for an additional 3 years by submitting an application during the 4th year.
You can also invest in NPS (National Pension System) online to save your future and earn a steady stream of income after you retire.
Expected return – 8.2%
Average Monthly Income – Rs 68333
- Fixed returns
- Low risk
- Government-backed security
- Regular monthly income
- Higher interest rates for senior citizens
- Limited liquidity
- Long lock-in period
- Age eligibility criteria
#5. Corporate Deposits
Corporate deposits are similar to fixed deposits, except they are offered by companies instead of banks. These deposits are typically offered by non-banking financial companies (NBFCs) or corporates to raise funds. While corporate deposits offer higher interest rates than fixed deposits, they also carry higher risk.
The interest rate offered on corporate deposits varies depending on the issuer and the bond rating. For instance, AAA-rated bonds are considered the safest, but they also have lower interest rates as compared to lower-rated bonds.
You can read how to invest in bonds in India to learn more about the different ways to invest in corporate bonds.
Expected return – 8% – 10%
Average Monthly Income – Rs 83333 at 10%
- Higher returns than fixed deposits and government bonds
- Regular fixed income
- Lower risk compared to equity investments
- Default risk associated with the issuing company
- Market volatility can impact returns
#6. Invest in Rental Properties
You can invest in properties that you can rent out to tenants and earn a regular rental income. However, being a landlord comes with its own set of challenges, such as dealing with tenant issues, vacancies, and repairs. If you have experience with real estate and managing rental properties then you can invest about 30% in rental properties.
Rental income is an additional source of income on top of the property valuation appreciation. The average rental return on property value is 4% in India.
Expected return – 4%
Average Monthly Income – Rs 33333 ( + property value increase)
- Regular monthly rental income
- Appreciation in property value
- Tangible asset
- Tax benefits
- High initial investment
- Property management can be time-consuming
- Vacancy risk
- Market fluctuations can impact rental income
Go through our article how to earn money online for students in India without hampering your study.
#7. MIP Mutual Funds
Monthly Income Plans (MIP) mutual funds are a type of debt-oriented mutual fund that provides regular monthly income. MIPs invest in a combination of 70% – 80% in debt and the remaining in stocks.
MIPs aim to provide a consistent income on a regular basis. However, the payout amount is not fixed or guaranteed as it depends on the fund’s performance, which can result in negative returns.
The returns on MIP mutual funds can vary significantly, ranging from 2% to 10%. When investing in MIP plans, it is recommended to choose only those plans that offer a minimum of 2% higher return as compared to fixed deposits.
You may also like to read our article on how to invest Rs. 5000 in share market in India.
Expected return – 9%
Average Monthly Income – Rs 75000
- Diversified portfolio
- Higher returns than fixed deposits and government bonds
- Professional management of the portfolio
- Risk involved in mutual fund investments
- Market volatility can impact returns
- No guaranteed returns
You may like to read how to invest 10 lakhs for monthly income in India.
#8. Mutual Funds Systematic Withdrawal Plans
You can withdraw a fixed amount from your mutual fund at regular intervals under the Systematic Withdrawal Plan (SWP) facility. To use SWP, you invest a lump sum amount in the mutual fund and choose a fixed monthly withdrawal frequency – either monthly, quarterly, half-yearly, or yearly.
Mutual funds SWP invests in equity mutual funds that can offer higher returns. Read our list of best brokers for mutual funds investment to know about top brokers to cater to your mutual funds’ investment needs.
Additionally, you have the option to only withdraw the capital gain on your investment while keeping the invested capital intact. Investing in equity mutual funds can offer higher returns.
One potential disadvantage of SWPs is that during a market downturn, you may be forced to sell your mutual funds at a loss in order to withdraw a fixed amount.
Expected return – 12%
Average Monthly Income – Rs 100000
- Regular monthly income
- Flexibility in withdrawal amounts
- Professional management of the portfolio
- Exposure to equity segment
- Risk involved in mutual fund investments
- Market volatility can impact returns
- No guaranteed returns
You can check out the list of best stock broker in India that offers low brokerage charges with good customer support.
#9. Dividend-Paying Stocks
If you are interested in investing in the stock market while also receiving regular income, you can consider investing in dividend stocks. While some companies pay dividends once a year, others may pay dividends two or three times a year. Although dividend stocks do not provide monthly income, you can calculate the annual dividend payout.
I have compiled a list of the highest dividend-paying stocks in India, with dividend returns ranging from 6.22% to 15.57%. Investing in large-cap stocks that provide an 8% to 10% annual dividend can be a good option. Additionally, these stocks may provide long-term price appreciation returns.
Expected return – 10%
Average Monthly Income – Rs 83333 ( + stock price return)
- Regular dividend income
- Potential for capital appreciation
- Liquidity
- Market volatility can impact returns
- Risk involved in stock investments
- No guaranteed returns
#10. Options Trading
You can make options trading as a part of your investment portfolio to generate monthly income. However, options trading is a high-risk, high-reward investment option.
If you have prior experience with options trading, you can allocate 10% to 20% of your investment portfolio to options trading. With the right options trading strategies, it is possible to earn up to 5% monthly on your investment with minimal time requirements.
For option trading, you need to open a demat and trading account with stockbroker. You can also use the Uptox coupon code for free demat and trading account opening fee with zero AMC charges.
You can also read our list of the best broker for option trading in India that offer cheap brokerage charges on trading.
Expected return – 5% monthly
Average Monthly Income – Rs 1,00,000 (on 20 lakh), You can earn Rs. 2,50,000 monthly income regularly by investing 50 lakhs in India.
- High potential for returns
- Flexibility in investment amount
- Short-term investment horizon
- Liquidity
- High risk involved in options trading
- Requires knowledge and expertise
- Market volatility can lead to significant losses
- No guaranteed returns
If you want to learn options trading then you can also use the paper trading apps to practice your trading strategies without risking real money.
Conclusion
You should choose the investment option that suits your needs, risk appetite, financial and goals. You can diversify your portfolio with a long-term investment horizon to manage the risks and generate regular income.
Nicely summarized with all options available in the market. Please also write a article for sr. citizens who want to invest large amount for monthly regular income or for investment purpose only not from monthly income purpose with right portfolio proportion.
I will add the topic in our content plan.
Nicely summarized Easy to understand