Nowadays people often look for investment options that can allow them to earn an extra amount along with their regular income. A side income can not only help you fund the extra expenses but is also instrumental in managing your income shortfalls. With an income-generating investment, you can now plan your income and streamline the financial aspects of your life.
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Thanks to the wide array of investment options present in the market from which you can choose and invest in the product that serves your purpose. Now you can generate a monthly income by letting your money do the work for you.
Your monthly income is the money that you earn each month after deductions and taxes. Most people look for opportunities to increase their monthly income by establishing a side business or by investing in income-generating investments. Given below are some of the options you can use to generate a monthly income from your investments:
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If you are planning to invest your money for 2 to 3 years and are willing to take a moderate risk then monthly income mutual fund is a good option for you. This investment instrument is ideal for investors who are looking for inflation-beating returns. The plan usually invests 20 to 30% in equity instruments and the remaining portion in debt instruments like CDs. You can create a portfolio based on your risk-bearing ability and thus increase the equity exposure on these funds. You can establish a monthly income by investing in the dividend-payout option.
You can plan your investments and select the right by considering your risk tolerance and overall financial goals. Also, you must consider evaluating the stock to bond ratio. Most of the funds tend to include both, but the funds that have higher equity exposure are the riskier ones that those that mainly invest in bonds.
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The Dividend yield is one of the primary factors you should consider while investing in dividend-paying stocks. Dividend payment can act as a passive income and a high-yield indicates the company can ride tough market situations.
Therefore if you are interested to invest your money directly in stocks and develop a regular stream of funds then high dividend yield stocks are ideal for you. The income mainly flows in from the high dividend-paying stocks and sometimes large organisations that trade in the stock exchanges pay quarterly dividends to investors.
Public utility companies and companies engaged in the energy or financial sector often roll out dividend payments. If you are able to choose your stocks well, then you are likely to enjoy a regular dividend payment or can significantly build a stronger portfolio by reinvesting these dividends.
Money market funds are those investments whose maturity is no longer than 12 months. These funds invest in short term debt instruments, cash and cash equivalents that are highly rated. Thus it contains minimum investment risk and is a safe option for investors who are looking to park surplus cash in investment instruments other than a bank savings account.
These funds are used to manage short-term fund requirements. In this type of investment, you can invest in high-quality liquid instruments like repurchase agreements, treasury bills, commercial papers and certificates of deposits. The main objective of the money market instruments is to earn an interest income for the unitholders.
The POMIS is one of the best schemes if you are in search of a guaranteed income-generating investment option. All you have to do is invest a lump sum and you will be able to get good interest income and guaranteed returns. Thus if you are looking for zero risk investment and hope to earn a continuous income then POMIS is the best option for you. The current interest rate stands at 7.3% and the scheme comes with a lock-in of 5 years.
Senior citizens can also invest in risk-free and popular savings scheme offered by the Indian post office. The SCSS scheme can be availed for 5 years that can offer significant returns at low-risk and higher tax benefits to senior citizens. The money invested must be in multiples of Rs.1000. Currently, the rate of interest offered for senior citizen saving schemes is 8.6% which makes it an ideal investment option for retirees.
Before investing in such income-generating schemes one must clearly chalk out the financial priorities and stick to a clearly drawn plan to benefit out of these schemes.
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