Earn extra happiness with Mutual Funds
1) MONTHLY INCOME PLAN
Ask advisor and they would recommend the MIP. These are Debt-based hybrid Mutual Funds formed specifically for providing a regular monthly payment. They usually have medium risk exposure as the aslo invest in Equities.
2) INTEREST PAYMENT
Debt Funds invest in Fixed Income securities like Bonds. These pay an interest amount every year, month or quarter. The Funds then distribute it to the Mutual Fund unit-holders.
3) EQUITY DIVIDENDS
All Equity and Balanced Funds regulary pay dividends. This is nothing but dividends paid by the underlying Stocks that the Fund has invested in. They could be a good source of secondary income.
4) SYSTEMATIC WITHDRAWAL PLAN-SWP
The first two options are for both new and old investors alike. The Systematic Withdrawal Plan is mainly for investors who have accumulated a sizeable portfolio of investments over the years. This corpus can be redeemed for monthly income.
SIP v/s STP v/s SWP confused with investment jargons?
Here is easy comparison chart:
|What||Monthly investment of fixed amount in Mutual Fund scheme.||Transfer of money from one scheme to another Mutual Fund scheme.||Fixed monthly redemption of Mutual fund scheme.|
|Why||Helps disciplin and spead out investment||Helps re-balance portfolio or change asset allocation||Helps exit investments for secondary monthly income|
|How||Your money get debited from bank account and used to buy Mutual Fund units.||The Fund House sells Mutual fund units and buy MF units of another scheme.||The Fund House sells MF units every month and credits the money in your bank account.|
|When||Ideal for all investment through out time.||Ideal when your are a few years away from goal or during market volatility.||Ideal for retirement or while using the money to Fund goal like child’s education or marriage.|
|Tax||Not applicable.||May attract Short Term or Long Term Capital Gain Tax depending on the MF your sell.||May attract Short Term or Long Term Capital Gain Tax depending on the scheme you redeemed.|
|Best for||Initial Investments||Reinvestment||Exiting Investments.|
Did you know?
If you miss claiming your dividend payments, the Fund has to invest in low-rise Money Market instruments. If you claim after three years, your will be paid both the original dividend amount as well as the returns earned.