Monthly Income Plans

Monthly Income Plans

Monthly Income Funds

Monthly Income Funds

A bank MIS is like a bank fixed deposit where interest earned is paid at regular intervals. The interest rates are the same as the prevalent fixed deposit rates. An MIP is a debt mutual fund scheme which invests a small part of the funds (15-25 per cent) in equities. It offers regular income in the form of periodic (monthly, quarterly, half-yearly) dividend payouts.
Due to the presence of equity, MIP returns can be volatile. At times, the scheme may suffer losses, making dividend payouts irregular – both in quantum and frequency. The scheme may, at times, not pay any dividend at all. In spite of this, MIPs of mutual funds can offer higher returns after adjusting for tax and hence can be a better option.
Investors wary of fluctuating income from MIPs’ dividend option can opt for a systematic withdrawal plan, or SWP, which allows regular redemption of a pre-determined amount. An SWP under an MIP can work as a regular source of income for investors, just like in a bank MIS.

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Posted in Debt Funds.

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