I am 56 years, married and residing in Belagavi. I am nearing retirement and want to receive a monthly fixed income from a mutual fund investment. I want to invest in monthly income plans and opt for monthly dividend options. Will I get regular income? Please advise
An MIP is a debt oriented mutual fund which gives you income, in the form of dividends. They generally have 75-80% of money in debt and rest in equity and cash. MIP’s with dividend option provides you an income in the form of dividends. There is an option to receive this income monthly, quarterly, half-yearly and yearly. So you have to choose the option at the time of buying the MIP. Dividends from mutual funds are not guaranteed in terms of how much they will pay out every month. A person such as yourself, who is entering retirement, cannot count on receiving a fixed amount every month using such an approach.The only reliable way to generate a monthly fixed amount as income from your mutual fund portfolio is to do so by setting up a systematic withdrawal plan (SWP). 1. Under SWP you can specify an amount to be redeemed from your investments into your bank account. 2. The value of your investments in the MIP will grow depending on the market and the dividend payouts happen depend on the profits made by the scheme. With the SWP your monthly withdrawals will happen regularly and you will receive a steady income in retirement.