Your monthly income on your 50 Lakhs investment portfolio depends on the investment option, interest rate, and return value.
If you are choosing the safe investments options like fixed deposits, government bonds, and government saving schemes, you can yield an annual return of approximately 7% to 8%.
However, if you are willing to take on higher risk, you can potentially earn a higher return by investing in stocks or mutual funds. It’s important to note that these options come with an increased level of risk.
Let’s explore 10 investment options for generating regular monthly income:
|Investment Option||Risk Class||Expected Return||Monthly Income||Annual Income|
|MIP Mutual funds||Moderate||9%||37,500||4,50,000|
|Mutual Fund SWP||High||12%||50,000||6,00,000|
|Options Trading||High||5% monthly||50,000||6,00,000 (on 10 lakhs)|
Diversify Your Investment Portfolio for Monthly Income
One such approach is the 70/30 model, which strikes a balance between risk and reward.
In this moderately conservative model, you allocate 70% of your portfolio to high-risk investments and the remaining 30% to low-risk ones. By adopting this strategy, you can pursue higher returns while maintaining a certain level of risk management.
You can diversify your 50 lakhs investment portfolio in such a way –
You may also like to read how to invest 1 crore for regular monthly income in India.
Factors to Consider for Rs. 50 Lakhs Monthly Income Investment Portfolio
#1. Risk Levels
To choose the right investment option, assess your risk appetite. If you are comfortable with higher risks for potentially higher returns, consider mutual funds or stocks.
If you prefer lower-risk investments, fixed deposits or post office schemes may be more suitable.
#2. Financial Objective
Consider your financial aim when selecting an investment option. If generating regular income is your primary objective, monthly income plans can be an ideal choice.
For long-term wealth creation, mutual funds or stocks may be more appropriate. Calculate the minimum annual return required to achieve your desired monthly income.
#3. Investment Purpose
Determine whether you are investing for retirement planning or seeking a passive income source. For retirement purposes, focus on relatively safe investment options that provide stable monthly returns.
If you aim to create wealth and have other active income sources, diversify your portfolio with stocks and mutual funds, targeting annual returns instead of monthly income.
#4. Investment Tenure
The investment tenure plays a crucial role in determining potential returns.
Short-term goals can be fulfilled with fixed deposits or post office schemes, while long-term goals may require mutual funds or stocks. Assess the tenure that aligns with your financial objectives.
You can also learn how to earn Rs. 1000 daily without investment online in India.
Best Investment Options to Invest 50 Lakhs for Monthly Income
#1. Sovereign Gold Bond
Sovereign Gold Bonds (SGBs) are government bonds issued by the Reserve Bank of India (RBI). Government bonds offer a safer investment option compared to corporate bonds.
SGBs have a tenure of eight years with interest payouts every six months. SGB provides a fixed interest rate of 2.5% per annum and the potential for gold price appreciation.
To invest in SGBs, you can apply through banks, post offices, authorized stock exchanges, or online platforms.
Apart from SGBs, there are other types of government bonds available, including
- Fixed rate bonds
- Inflation-indexed bonds
- PSU Bonds
- Zero Coupon Bonds
Expected Monthly Income Return for Government Bonds – Investing in government bonds with an expected return of 8% can generate an average monthly income of approximately 33,300.
#2. Invest in Treasury Bills
Treasury Bills (T-bills) are short-term debt instruments issued by the government to raise funds. T-bills are considered one of the safest investment options as they are backed by the government.
Treasury Bills have a maturity period of less than one year, typically ranging from 91 days to 364 days. As per the RBI regulations, you can invest a minimum of Rs. 25,000 in T-bills with additional investments made in multiples of Rs. 25,000.
Yield Rate on Treasury Bills
You can calculate the percentage of yield generated from a treasury bill from the following formula –
Yield Return in % = Discount value/P x 365/D x 100
- P = Discounted price at which a security is purchased
- D = Tenure of a bill
For example, if a 91-day T-bill is purchased at a discounted price of Rs. 98 with a face value of Rs. 100, the yield would be calculated as
Yeld = 2/98 x 365/91 x 100,
resulting in 8.19% yield (annualized basis).
The typical yields on 91-day T-bills range from 6% to 7.5%. T-bills are yielding more than the most bank fixed deposits.
Here is a comparison of the yields offered by different banks and T-bills across different tenures:
Expected Return – Around 6-7.5% for 91-days yields
Average Monthly Return – Rs. 25,000 to 31,250
You can check out our article how to earn money online in India for students without hampering your study.
#3. Banks Fixed Deposits
Fixed deposits are a convenient option for generating regular income as they provide interest payouts on a monthly basis. Additionally, you have the option to choose cumulative fixed deposits, which can offer higher annual income.
If you’re looking for tax-saving investments, you can opt for tax saver fixed deposits based on your income requirements and tax planning needs. The interest rate on fixed deposits can vary depending on factors such as the bank, deposit amount, and tenure.
It’s important to note that small finance banks often offer higher interest rates compared to public or private banks, particularly on special category days.
- Jana Small Finance Bank offers a competitive interest rate of 8.50% on a special 500-day deposit for regular citizens.
- Ujjivan Small Finance Bank provides an attractive interest rate of 8.25% on a special 560-day deposit for regular citizens.
- Additionally, senior citizens can enjoy an additional interest rate of 0.50%.
Expected Monthly Income Return – With a 50 lakh investment in fixed deposits, you can expect an average monthly income of approximately Rs. 33,300 – 37,500, considering an interest rate of 8-9%.
Go through our article how to invest 25 lakhs for monthy income return.
#4. Corporate Bonds
Corporate bonds are debt securities issued by non-banking financial companies (NBFCs) instead of traditional banks. The corporate bonds provide higher interest rates that are determined by the issuer and the bond rating.
Bonds with a higher credit rating are considered safer investments but typically offer lower interest rates compared to lower-rated bonds. It’s crucial to assess the creditworthiness of the issuing company before investing.
If you choose to invest in corporate deposits, you have the option to select the monthly payout scheme, which allows you to generate a steady monthly income. However, it’s important to note that corporate deposits come with a higher level of risk compared to bank fixed deposits.
Here are some examples of corporate deposit interest rates from companies with CRISIL-FAAA and ICRA-MAAA ratings:
|Company Name||1 Yr||2 Yr||3 Yr||4 Yr||5 Yr||Senior Citizen|
|HDFC Limited (Green & Sustainable Deposit)||–||7.25%||7.30%||7.20%||7.20%||0.25%|
|Mahindra Finance Ltd||7.40%||7.60%||7.70%||7.75%||7.75%||0.25%|
|Bajaj Finance Ltd||7.40%||7.50%||7.55%||7.35%||8.05%||0.25%|
|ICICI Home Finance||7.00%||7.00%||7.35%||7.45%||7.45%||0.25%|
Expected Monthly Income Return – With an interest rate of 10%, you can earn a monthly income averaging around Rs. 41,700.
#5. Government Saving Schemes
Government savings schemes, like the Post Office Monthly Income Scheme (POMIS), provide you with a secure investment option to generate regular monthly income.
POMIS allows you to deposit a maximum amount of Rs. 9 lakhs in a single account or Rs. 15 lakhs in a joint account.
You can receive a fixed interest rate on a monthly basis. The tenure of POMIS is set at 5 years, and the interest rate is revised every quarter to ensure competitive returns for you.
Opening a POMIS account is simple –
- Visit the nearest post office.
- Complete the application form
- Submit it with the necessary identification and address proof documents.
It’s important to note that currently, POMIS accounts can only be opened in-person at post offices, as online facilities are not available.
Expected Monthly Income Return for POMIS – Investing in the POMIS scheme with an expected return of 7.4% can generate an average monthly income of approximately 30,800.
You can save for your future and secure a steady stream of income post-retirement by investing in NPS (National Pension System).
#6. Senior Citizen Saving Scheme (SCSS)
The Senior Citizen Saving Scheme (SCSS) is a government-backed savings plan for senior citizens. By depositing a lump sum amount, you can enjoy a fixed interest rate that is paid out every quarter.
The maturity period for SCSS is five years, with the option to extend it for an additional three years.
As a senior citizen aged 60 years or above, you can deposit a maximum of 30 lakhs in an SCSS account. While SCSS offers the advantage of being a low-risk government scheme, it typically provides lower returns compared to investment options like dividend stocks and mutual funds.
To open an SCSS account, you have two options to visit the –
- Nearest Post Office
- Authorized Banks
Expected Monthly Income Return – With an expected return of 8.2%, investing in the SCSS can generate an average monthly income of approximately Rs. 34,200.
#7. Options Trading
Option trading is a popular investment strategy that involves buying and selling options contracts on the stock market. Options are financial derivatives that give you the right, but not the obligation, to buy or sell an underlying asset (such as stocks, commodities, or currencies) at a predetermined price within a specified time frame.
Option trading provides you with the opportunity to profit from market fluctuations, as options can be used for various strategies, including hedging, income generation, and speculation.
There are two types of options: call options and put options. A call option gives the holder the right to buy the underlying asset, while a put option gives the holder the right to sell the underlying asset.
You can trade options by entering into contracts and paying a premium, which is the cost of the option. The premium is determined by factors such as the underlying asset’s price, the option’s strike price, the time to expiration, and market volatility.
You can allocate 10% to 20% of your portfolio to options trading if you have expertise in this area. With the right option trading strategies, you can earn a 5% monthly return on your investment. You can also use the option trading apps to invest and trade in options.
However, it’s important to note that options trading can be complex and carries risks, including the potential loss of the premium paid and the risk of the option expiring worthless.
If you want to do option trading, you can check out the list of broker for option trading that offer cheap brokerage charges on option trading.
Expected Monthly Income Return – With an expected monthly income return of 5% on your 10 lakh investment, you can potentially earn a steady monthly income of Rs. 50,000.
You can also learn how to read Japanese candlestick charts that helps in option trading.
#8. Systematic Withdrawal Plans (SWP) in Mutual Funds
Systematic Withdrawal Plan (SWP) is an investment strategy that allows you to withdraw a fixed amount of money from your mutual fund at regular intervals.
With SWP, you can invest a lump sum amount in a mutual fund and set a predetermined withdrawal frequency, such as monthly, quarterly, semi-annually, or annually.
SWP is available across various types of mutual funds, including equity funds, debt funds, hybrid funds, or balanced funds. If you are seeking higher returns, you can consider investing in equity mutual funds.
With SWP, you have the advantage of withdrawing only the capital gains while preserving your initial investment. However, it’s important to note that during market downturns, you may need to sell units at a loss to maintain the fixed withdrawal amount.
Expected Monthly Income Return – Based on an expected return of 12%, investing 50 lakhs can potentially generate a monthly income of approximately 50,000.
#9. Invest in High Dividend Paying Stocks
High dividend paying stocks refer to stocks of companies that distribute a significant portion of their earnings to shareholders in the form of dividends.
Investing in dividend-paying stocks offers the opportunity to generate a consistent income stream. While these stocks may not provide monthly income, you can estimate your earnings based on annual dividend payments.
Choosing dividend stocks allows you to participate in the stock market while enjoying regular income. In my research, I have identified the top dividend-paying stocks in India, offering dividend returns ranging from 6.22% to 15.57%.
Consider investing in large-cap stocks that provide annual dividends of 8% to 10%, alongside the potential for long-term price appreciation.
Expected Monthly Income Return – With an expected return of 10%, investing 50 lakhs can potentially generate a monthly income of around Rs. 41,700. You can also consider the additional returns from stock price appreciation.
#10. Monthly Income Plans
Monthly Income Plan (MIP) mutual funds are debt-oriented funds that offer regular monthly income. With MIP investment, you can enjoy the benefits of both debt and equity in a single plan.
Generally around 70% to 80% of the fund’s portfolio is allocated to debt instruments, while the remaining portion is invested in stocks.
The primary objective of MIPs is to offer stable returns through a mix of fixed-income securities and potential capital appreciation from equity investments. However, the payout amount from MIPs is not fixed or guaranteed.
The income you receive depends on the performance of the fund, and there is a possibility of negative returns. You can choose an MIP plan only if it offers a minimum of 2% higher return than fixed deposits.
Expected Monthly Income Return – You can expect a monthly income of Rs. 37,500 with return of 9% from MIP mutual funds.
If you have a 15 lakhs then you can learn how to diversify your 15 lakhs investment portfolio to earn monthly income.
Frequently Asked Questions (FAQs)
You can invest in fixed deposits offered by banks, including small finance banks, to generate regular monthly income. With an interest rate of 8-9%, you can expect an average monthly income of approximately Rs. 33,300 – 37,500.
SGBs are government bonds that offer a fixed interest rate and the potential for gold price appreciation. You can invest in SGBs through banks, post offices, authorized stock exchanges, or online platforms.
The yield rate can be calculated using the formula:
Yield Return in % = Discount value/P x 365/D x 100,
where P is the discounted price and D is the tenure of the bill.
Government savings schemes like POMIS are considered safe due to the backing of the government. However, they may offer relatively 7.4% returns which is lower as compared to corporate deposits.
You can also explore the corporate deposit which gives you about 10% return.
Government saving schemes such as the Post Office Monthly Income Scheme (POMIS) and Senior Citizen Saving Scheme (SCSS) provide secure investment options for generating regular monthly income.
Options trading involves buying and selling options contracts on the stock market. With the right strategies, options trading can potentially generate a 5% monthly return on your 10 lakh investment, resulting in a steady monthly income of Rs. 50,000.
Yes, reinvesting the monthly income generated from investments is a common strategy to compound your returns over time. By reinvesting the income, you can potentially benefit from the power of compounding and accelerate the growth of your investment portfolio.