How To Invest 1 Crore For Monthly Income in India

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.

#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. 

#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.

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.

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% 

Average Monthly Income – Rs 58400

Pros

• Fixed returns
• Low risk
• Guaranteed principal amount
• Easily accessible

Cons

• 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 bonds that provide a minimum of 8% return. 

Expected return – 8%

Average Monthly Income – Rs 66667

Pros

• Fixed returns
• Low risk
• Government-backed security
• Interest income is tax-exempt in some bonds

Cons

• 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

Pros

• Fixed returns
• Low risk
• Guaranteed monthly income
• Government-backed security

Cons

• 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.

Expected return – 8.2%

Average Monthly Income – Rs 68333

Pros

• Fixed returns
• Low risk
• Government-backed security
• Regular monthly income
• Higher interest rates for senior citizens

Cons

• 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%

Pros

• Higher returns than fixed deposits and government bonds
• Regular fixed income
• Lower risk compared to equity investments

Cons

• 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)

Pros

• Regular monthly rental income
• Appreciation in property value
• Tangible asset
• Tax benefits

Cons

• High initial investment
• Property management can be time-consuming
• Vacancy risk
• Market fluctuations can impact rental income

#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.

Expected return – 9%

Average Monthly Income – Rs 75000

Pros

• Diversified portfolio
• Higher returns than fixed deposits and government bonds
• Professional management of the portfolio

Cons

• Risk involved in mutual fund investments
• Market volatility can impact returns
• No guaranteed returns

#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.

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

Pros

• Regular monthly income
• Flexibility in withdrawal amounts
• Professional management of the portfolio
• Exposure to equity segment

Cons

• Risk involved in mutual fund investments
• Market volatility can impact returns
• No guaranteed returns

#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)

Pros

• Regular dividend income
• Potential for capital appreciation
• Liquidity

Cons

• 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. 

Expected return – 5% monthly 

Average Monthly Income – Rs 1,00,000 (on 20 lakh) 

Pros

• High potential for returns
• Flexibility in investment amount
• Short-term investment horizon
• Liquidity

Cons

• 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 check the list of YouTubers whom I follow to learn options trading.

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.