How To Invest 25 Lakhs For Monthly Income in India

You can generate a passive monthly income stream by investing in a portfolio of 25 lakh

Before exploring the investment options available for creating a monthly income from this portfolio let me show you how much you can earn monthly on 25 lakh. 

How Much Monthly Income Can You Earn From a 25 Lakh Investment

Your monthly income from a 25 lakh investment depend on the investment option, interest rate, return value, and risk involved. 

If you invest in safe investment options like fixed deposit, government bonds, and post office monthly income then you can get an annual return of 7% to 8%.  

You can get a higher return by investing in stocks or mutual funds but they have high risk associated. 

Let’s understand the average monthly potential of 10 investment options that you can use for regular income 

Investment Option	Risk Class	Expected Return	Monthly Income
Fixed Deposit	Low	7%	14600
Government Bonds	Low	8%	16667
POMS	Low	7.4%	15400
SCSS	Low	8.2%	17083
Corporate bond	Moderate	10%	20800
Property Rent	Moderate	4%	8000
MIP Mutual funds	Moderate	9%	18750
Mutual Fund SWP	High	12%	25000
Dividend Stocks	High	10%	20800
Options Trading	High	5% monthly	10,000 (on 2 lahks)

You can diversity your 25 lakh investment portfolio to make a balance between return and associated risk. 

If you are young and working then you can make a 50/30/20 portfolio in which you invest 50% in stocks or mutual funds, 30% in moderate-risk investment options, and 20% in government schemes or fixed deposits. 

If you are retired then you can invest 70% in lower-risk options and the remaining 30% in moderate or high-risk investment options. 

Factors to Consider for Rs. 25 Lakh Monthly Income Investment Portfolio

#1. Risk appetite 

Your risk appetite is an essential factor in choosing the investment option that suits your needs. 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 30,000, then you need to invest in a higher return investment option that gives a minimum of 12% annual return on your 25 lakh. 

#3. Purpose 

Do you want to invest 25 lakh 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. 

Best Investment Options for Monthly Income in India 

#1. Fixed Deposits

Fixed deposits are one of the most popular investment options for generating regular income. 

You can choose a monthly payout option to use fixed deposits to generate a monthly income on 25 lakhs fixed deposit. 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 14600

Pros

• Low risk
• Guaranteed returns
• Suitable for conservative investors

Cons

• Low returns compared to other investment options
• Interest income is taxable

#2. Corporate Deposits

Corporate deposits are similar to fixed deposits, but they are offered by companies instead of banks. Corporate deposits are typically offered by non-banking financial companies (NBFCs) or corporates looking to raise funds. You get a higher interest on corporate deposits as compared to fixed deposits, but they also carry higher risk.

You can choose a monthly payout option to generate a monthly income of 25 lakhs on corporate deposits. 

The interest on corporate deposits depends on the issuer and the bond rating. For example, AAA-rating bonds are considered the safest among the others, but their interest rate is also lower as compared to the lower-rating 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 20800 at 10%

Pros

• Fixed income 
• Higher returns compared to fixed deposits
• Suitable for investors with moderate risk appetite

Cons

• Higher risk compared to fixed deposits
• Interest Income is taxable

#3. Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is a government-backed savings scheme that provides regular monthly income. Under POMIS, you can deposit a lump sum amount, and in return, you receive a fixed interest rate. The tenure of POMIS is five years, and the interest rate is revised every quarter.

Expected return – 7.4%

Average Monthly Income – Rs 15400

Pros

• Low risk
• Guaranteed returns
• Suitable for conservative investors

Cons

• Lower returns compared to other investment options
• Interest income is taxable

#4. Monthly Income Plan Mutual Funds

Monthly Income plans (MIP) mutual funds are debt-oriented mutual funds that provide regular monthly income. MIPs invest in a mix of debt and equity instruments to generate stable returns. 70% -80% of the funds go into the debt instruments whereas the remaining goes to the stocks. 

MIPs aim to pay a consistent income on a regular basis. Whereas, the payout amount is not fixed and guaranteed as it depends on the fund’s performance. You can get negative returns as well. 

You would find a lot of variation from 2% to 10% in the returns of MIP mutual funds. You should choose the MIP plan only if you get a minimum 2% higher return as compared to the fixed deposit. 

Expected return – 9%

Average Monthly Income – Rs 18750, You can earn Rs. 75000 monthly through MIP mutual funds by investing 1 Crore in India. You may like to read how much monthly income can you earn by investing 1 crore.

Pros:

• Higher returns compared to fixed deposits and POMIS
• Suitable for investors with moderate risk appetite

Cons:

• Subject to market risks

#5. Dividend Stocks

You can invest in the stocks that pay regular dividend payout to the shareholders. Some companies pay dividends once a year while a few companies pay dividends 2 or 3 times a year. 

Dividend stocks wouldn’t provide you with a monthly income but you can calculate on the basis of annual dividend payout. 

You can invest in dividend stocks if you want to invest in the stock market along with an option of regular income. 

I have compiled a list of the highest dividend paying stocks in India with dividend returns from 6.22% to 15.57%. You can invest in large-cap stocks that provide an 8% to 10% annual dividend. Additionally, you would get a price appreciation return in the long run. 

Expected return – 10%

Average Monthly Income – Rs 20800 ( + stock price return) 

Pros

• Expore to stock market 
• Higher return potential as compared to other options in the list
• Suitable for investors with a long-term investment horizon

Cons

• Dividend income is not fixed
• Subject to market risks

#6. Renting Out Property

Renting out property is another option to generate monthly income. You can invest in a rental property and rent it out to tenants to generate rental income. Rental income can provide a steady source of income, but you may need to face some issues like vacancy, repairs, and tenant issues. 

Rental income will be additional income to your return on property valuation appreciation. 

In India, the average rental return on property value is 4%. 

Expected return – 4%

Average Monthly Income – Rs 8000 ( + property value increase)

Pros:

• Fixed monthly income 
• Safe investment option
• Potential for capital appreciation

Cons

• High investment amount required
• Risk of vacancy, repairs, and tenant issues

#7. Senior Citizen Saving Scheme

The Senior Citizen Saving Scheme (SCSS) is a government-backed savings scheme for senior citizens that provides regular monthly income. Under SCSS, you deposit a lump sum amount, and in return, you receive a fixed interest rate every quarter. 

If you are 60 years old, you can deposit a lump sum deposit of a maximum of 30 lakh in SCSS. The maturity period of SCSS is 5 years. You can extend the maturity period for 3 more years by submitting an application in the 4th year.

Expected return – 8.2%

Average Monthly Income – Rs 17083

Pros

• Low risk being the government scheme
• Guaranteed returns
• Suitable for senior citizens

Cons

• Lower returns compared to dividend stocks and mutual funds

#8. Systematic Withdrawal Plans

You can withdraw a fixed amount from your mutual fund at regular intervals under the Systematic Withdrawal Plan (SWPs) facility. 

You invest a lump sum amount in the mutual funds and choose a fixed monthly withdrawal from the mutual funds.  You can choose monthly, quarterly, half-yearly, or yearly withdrawal. 

​​You will have the option to only withdraw the capital gain on your investment keeping your invested capital intact. You can invest in equity mutual funds for a higher return. 

One disadvantage is that during a market downturn, you may have to sell your mutual funds at a loss in order to withdraw a fixed amount.

Expected return – 12%

Average Monthly Income – Rs 25000

Pros

• Highest monthly income potential 
• Suitable for investors with a long-term investment horizon

Cons

• You may need to sell mf units at a loss 
• Returns depend on the market performance

#9. Government Bonds 

Government bonds are debt instruments like corporate bonds issued by the central government or state government under the supervision of the Reserve Bank of India. 

Government bonds are safer than corporate bonds. The tenure of government bonds can be in the range of 5 years to 40 years. 

You receive the interest payout every six months on the government bonds. 

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 16667

Pros

• Low risk involved being the government scheme
• Different options available with different return potential

Cons

• Lower return as compared to stocks and mutual funds 
• No premature exit option with some bonds

#10. Options Trading

You can use options trading as a part of your investment portfolio to earn monthly income. Options trading is a high-risk, high-reward investment option. 

If you have experience with options trading then you can deploy 10% to 20% of your investment portfolio to options trading. You can make 5% monthly on your investment once you learn the right option trading strategies. 

You can check the detailed comparison between Upstox vs Groww to know about the account opening fees and brokerage charges for option trading.

Expected return – 5% monthly 

Average Monthly Income – Rs 10,000 (on 2 lakh) 

Pros

• High returns potential as compared to other investment options

Cons

• High risk
• Requires knowledge and experience in 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. 

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